Danger Zone

or the National Oceanic and Atmospheric Administration, the trouble started last January, when the first components of a new supercomputer designed for advanced weather forecasting arrived at Federal Office Building 4 on the Suitland, Md., federal campus. The new computer system, which was heavier than the old one, caused the floor to buckle, exposing asbestos that had been safely sealed away for decades. Not long after that, NOAA discovered loose asbestos in the air handling system-triggering concerns that unsuspecting employees might have inhaled some of the toxic particles.

Problems continued to escalate. By March, tests of the building's water supply found traces of lead, copper and coliform bacteria. "The magnitude of what just kept happening was overwhelming," recalls Scott Gudes, deputy undersecretary at NOAA.

Sharing Building 4, as well as occupying three other buildings on the Suitland campus, the Census Bureau has faced similar problems over the years. When Census officials learned about the latest water problems, they immediately ordered tests in the rest of their buildings; all had contaminated water. Now signs are posted above the water fountains directing employees to drink bottled water, and signs in the bathrooms read: "WATER SAMPLING IN PROGRESS. DO NOT USE THE WATER FOR CONSUMPTION."

As they have for years, Suitland employees also struggle with regular indoor flooding caused by leaky pipes. During a two-month period last summer, Census experienced 125 leaks, one of which flooded the offices of Director Kenneth Prewitt and Deputy Director and Chief Executive Officer William Barron, soaking the carpets and triggering health concerns. "The conditions out here are really deplorable," says Barron, who plans to have the antiquated air conditioning system that is responsible for most of the leaks tested for Legionnaires' disease. The conditions have hurt morale and productivity, he says.

The General Services Administration, which controls about 40 percent of federal office space, is the landlord at Suitland. GSA officials insist the problems there are unusual at federal buildings. Still, they admit that conditions at many facilities are far from ideal. "The average age of our owned buildings is 55 years, far above the private-sector average" of 22 years, GSA Administrator David Barram told a House Appropriations subcommittee in March. "We have many old buildings that have never had a total rehabilitation, many that have totally obsolete heating/air conditioning systems and utility connections and can't support 21st century operations, and some that need seismic upgrades to remain occupiable."

The General Accounting Office last published a report on the condition of federal buildings back in 1991, declaring that "federal buildings have been neglected and now need major repairs and alterations to bring them up to acceptable quality and health and safety standards." The most recent comprehensive look at the issue, done by the National Research Council in 1998, found that little had changed since GAO's review. The "physical condition of the federal facilities portfolio continues to deteriorate, and many federal buildings require major repairs to bring them up to acceptable quality, health and safety standards," concluded the "Stewardship of Federal Facilities" report, which looked at all federal property, not just that owned by GSA.

As the inventory continues to age, problems could get significantly worse-something that concerns the House Transportation and Infrastructure subcommittee that oversees public buildings. In August, the Subcommittee on Economic Development, Public Buildings, Hazardous Materials and Pipeline Transportation asked GAO to revisit the issue. GAO is expected to testify on the matter at a March 2000 hearing, with its final report due in May, according to a House staffer.

Suitland's Saga

The Suitland campus has struggled with water leaks, water quality and electrical outages for years. But late last year, the conditions started getting more visibility within Congress and GSA after a controversy arose between the campus and the community. Locals had complained for some time that the barbed-wire fence rimming the 480-acre campus made the facility look like a prison and gave a generally unsavory feel to the area. Responding to these concerns, a Maryland senator, Democrat Barbara Mikulski, slipped an extra $1.1 million into GSA's fiscal 1999 appropriations bill to replace the fence. Then in September 1998, frustrated representatives from the American Federation of Government Employees invited Mikulski to Suitland to see the conditions. Their goal was to show Mikulski that the site had far more pressing needs than a cosmetic fence change, says Avis Buchanan, president of AFGE Local 2782, which represents about 4,000 Census employees at Suitland.

Not long after that, NOAA's problems in Building 4 erupted, halting the installation of the supercomputer. Because NOAA needed to have the system operational by this fall-or else be forced to continue spending more than $300,000 a month on expensive contracts for older computers-the need for repairs became urgent. Well aware of the generally poor conditions, NOAA hadn't wanted to put the computer in Building 4 in the first place, Gudes says. But Congress had denied funding to construct a new building for the weather prediction center.

By the time fiscal 2000 appropriations bills were being debated earlier this year, there was bipartisan support for ordering GSA to find long-term solutions for Suitland. Among those supporters was Rep. Steny Hoyer, D-Md., who had visited the campus a number of times, including a day when the temperature was more than 90 degrees and the air conditioning system wasn't working, says Hoyer spokeswoman Debra DeShong. Though they were still pending at press time, both the House and Senate versions of GSA's fiscal 2000 appropriations bills order the agency to do a study within 60 days of enactment detailing the safety and health problems faced by Census employees and to develop a plan for modernizing facilities.

For NOAA, whose funding bill also was pending, the Senate approved $10 million to help the agency improve conditions for its satellite service operations, which along with the weather center have been located in Building 4. The Senate language directs NOAA officials to start the process of relocating the weather prediction center to "state-of-the-art facilities more commensurate with their vital national mission." At press time, the supercomputer was being installed in a 2-year-old building in Bowie, Md., that also houses Census mainframes and servers.

GSA's Role

Despite the frustrations, everyone involved agrees that GSA staffers, who have offices on site, have responded to problems as they arose. For example, GSA is providing bottled water for campus staff until the water quality situation is sorted out. In Building 4, the landlord agency installed temporary ventilation units that draw in air directly from outside until they can make sure there is no more asbestos in the air-handling system. And GSA employees meet regularly with NOAA and Census staff to discuss the status of testing and remediation work.

"They're here," says Nancy Potok, principal associate director and chief financial officer at Census. "But the people who are here don't have the authority or money for a systematic approach to fixing the problems. GSA's approach has been a Band-Aid approach."

For their part, GSA officials say they are proud of the way they've handled the latest round of problems. "We think we jumped on it," says Robert Peck, commissioner of GSA's Public Buildings Service. "We've had these kinds of problems in buildings before. [At Suitland,] we shut off the water in two places where we felt like the water needed to be shut off, we flushed the lines, all the things that you're supposed to do. We really want to make sure the employees out there feel comfortable, that it's a safe place to work." GSA officials also note that back in 1993, they proposed a $58 million renovation of one Census building, but Census at the time was pushing for a new facility to be built above a nearby Metro station that was under construction. Ultimately, the agency lost its fight for a new facility and, in the process, forfeited the renovation funds.

Even as Peck boasts about GSA's performance, he freely acknowledges that the Suitland buildings are well past their peak. "Here's the bottom line," he says. "At Suitland, much to the credit of folks in GSA, I think, and to the credit of people in Commerce, the federal government took a bunch of what were supposed to be temporary World War II-vintage buildings, and we wrung every last penny's worth of value out of those suckers-probably more than the last penny.

"We now think it's time to bite the bullet and say Commerce has got fairly important functions out there. We owe them and the local community some kind of better buildings than what we've got. And so we're going to propose in the budget next year that we start designing new buildings at Suitland because our analysis shows it just isn't worth trying to renovate the buildings." Both Census and NOAA are Commerce Department agencies.

Whether or not Congress will approve the funding to rebuild the Suitland campus remains unclear. Even if congressional approval is forthcoming, Peck says construction wouldn't start before mid-fiscal 2002. "That would be quick," he adds. And then the buildings would have to be rebuilt one by one, a process that would take years.

Root Causes

While the Suitland buildings may be among the worst in the federal inventory, a lot of agencies are in antiquated buildings. Among GSA's "Gray Ladies," as they're known, are the Washington headquarters offices of GSA itself, Commerce, the Interior Department and the Office of Personnel Management.

Keeping the old building systems going comes at a high price. Interior's air conditioning system, for example, which also is supposed to cool the neighboring GSA building, is so inefficient that GSA had to install its own central air system, as well as window units, Peck says. In addition, because water isn't circulated and filtered as frequently in old systems as in new ones, bacteria can grow, potentially causing health problems. "When you know you have these kinds of things, you monitor and test like crazy," Peck says. "That's pretty expensive. You don't have to do it on more modern systems."

The reasons GSA hasn't kept up with major renovations have as much to do with politics as anything. "There is more interest, as there has been since the beginning of the republic, in building buildings than in maintaining them," Peck says. He equates the situation to the Defense Department's challenges in convincing the Office of Management and Budget and Congress that once a military has troops, it also must feed and train them. "If you buy so much equipment that you don't have the money to do that, then you have a serious problem," he says. "It's the same thing with us. There is sometimes more interest in the big new things than the old things."

GSA funds renovation work-which it categorizes as "repairs and alterations"-from the Federal Buildings Fund, created by Congress in 1972. The buildings fund law directed GSA to charge commercially equivalent rents to agencies that lease space and collect those rents in the fund, which is to be used to pay for repairs, alterations and operations costs. "The only money available to us to repair buildings is the money that's left over after we collect our revenues and pay out our obligations," Peck says. "In the past couple of years, we've had success in increasing the money we have on the bottom line. But Congress has to allow us to spend it. Even though we may generate more income, we may not get to spend it."

Adequate Funds

Congress' meddling in the fund is partly responsible for the declining state of many federal buildings. Over the years, legislators imposed a series of rent restrictions because of concern about such things as the growing budget deficit. In some cases-for example, the Woodrow Wilson International Center for Scholars in the Ronald Reagan Building and International Trade Center in Washington-Congress has ordered GSA to provide rent-free space. As a result, GSA ends up subsidizing some rents, ultimately taking from the fund millions of dollars that otherwise could be used to keep up with repairs.

GSA, though, also deserves some blame for failing to set at commercial levels the rents it could control. Before GSA revamped its leasing policy in 1996, "we were losing money on the half of our budget that's lease payments because of the bizarre bureaucratic way we were setting rents in leased buildings," Peck recalls. "We were in some cases 10 years behind the market. . . . We were signing new leases at higher rental rates and then GSA was basically subsidizing the federal tenants who were fortunate enough to be in those leases. That was money right off of our bottom line, which affected the health of the buildings fund."

The private-sector benchmark puts ideal repairs and alterations funding at about 2 percent to 4 percent of an inventory's total value each year. For GSA's approximately $30 billion inventory, "that suggests that we should be somewhere between $600 million and $1 billion," Peck says. In fact, in three of the past six years, the agency spent less than $600 million, and in the other three the amount hovered around $660 million. While these amounts are not enough to address every building that needs major renovation, Peck insists they are adequate for keeping up with "life safety" matters such as water quality and fire safety. "We think we've got mostly enough money to take care of those basic needs in our buildings," he says.

Going It Alone

The Federal Buildings Fund's underfunding has frustrated some agencies to no end, leading them to ask Congress for relief. The Agriculture Department, for example, sought and received special authority to retain $12 million in rent it would have paid to GSA from 1988 through 1991 to spend on repairing and replacing windows and elevators. And the Defense Department, after urging GSA for years to renovate the Pentagon and realizing that the buildings fund would never have the money to do the job, finally won congressional approval in 1990 to withdraw from the fund and assume control of the 1940s building itself.

During World War II, the Pentagon was thrown up in just 16 months, and because the nation was rationing supplies for the war effort, corners were proudly cut. President Franklin Roosevelt actually boasted that because builders had relied primarily on reinforced concrete to construct the five-sided giant, the government had saved enough steel to build a battleship. The shortcuts came back to haunt the Pentagon years later. By the early 1990s, the building had problems with power outages, asbestos, water leaks, cracked walls, and an ineffective heating and cooling system.

The Defense Department, which is funding the 12-year, $1.2 billion renovation project with rental fees paid by its tenants, has been "extremely satisfied" with its decision to withdraw from the Federal Buildings Fund, says DoD spokesman Glenn Flood. Major renovations since work began in 1994 include replacing the heating, ventilation and air conditioning system. The renovation project is still on schedule and expected to fall within cost estimates, Flood says.

This approach may be working for DoD-which as owner of 29 percent of federal real estate is an experienced property manager-but many agencies have neither the resources nor the desire to take control over maintaining their buildings. They just want their landlord to take care of things. Census and NOAA, for example, aren't looking to withdraw from the Federal Buildings Fund. They only want to get the Suitland problems sorted out and, preferably, new, better space provided for their employees and equipment.

Alternative Tools

Given the repairs needed at federal buildings across the country, the matter of how to fund necessary work has been debated for years. The essence of the problem is that major building repairs require long-term capital investment, something the current annual budget and appropriations process discourages. Under today's budget rules, capital improvements are treated like any other expense and therefore are usually avoided, even though the long-term financial payoff might be worthwhile. As a result, renovations go undone and problems stack up-until they reach the critical point that Suitland has reached.

Critics of the current system, including the General Accounting Office, believe the government should create a separate capital budget to fund long-term capital improvement projects. But with the short-term focus of legislators, there's almost no chance of that becoming a reality, Peck and congressional sources say.

Other funding mechanisms are available, however. In April, the House Government Reform Subcommittee on Government Management, Information and Technology held a hearing to discuss how public-private partnerships could help. These partnerships-which some agencies have tried via special legislative authority-are especially useful when the government no longer needs a property but cannot sell it because of historical, environmental or other concerns.

In Galveston, Texas, GSA formed a partnership with the local historic preservation foundation to upgrade a historic building once used by the Customs Service. The 1930s building, which was costing GSA $100,000 a year in basic upkeep, needed $1 million in renovations. But "it made no sense for us to put a million dollars into that building," which Customs no longer needed, Peck says. So the local historic foundation put up the money and now rents the building from GSA for $1,000 a year. "It's a good deal for them, and a fine deal for us too," he adds.

In a similar arrangement, GSA has leased the old U.S. Tariff Commission building in Washington to a hotel developer. The layout of the building isn't appropriate for the typical modern office configuration of cubicles, Peck notes, but is ideal for hotel rooms. The location is near a major concert and sports venue as well as restaurants and theaters, also important for a hotel. "The government holds too much real estate," Peck says. "Where we decide we're going to keep a historic federal building [in the active inventory], we want it to be a high-quality federal building" that meets today's government office needs. Peck also would like the authority to tap private banks to help finance repairs and alterations. "If I were a private-sector organization, I would go to the private market-to the bank-and say, 'If you lend me $70 million, I will fix up this building and have a guaranteed income stream from a government tenant for 30 years. Will you give me a favorable loan rate?' They would say, 'How fast can you [fill out] a loan application?' "

GSA officials also would like agencies to be allowed to keep the proceeds of any property they do sell, to increase the incentive to discard unneeded space whose upkeep puts added pressure on already limited funds. Property sales proceeds generally go into the Interior Department's Land and Water Conservation Fund, which is used for buying land and water areas for outdoor recreational use.

Peck, who spent a number of years as a Senate aide, is too experienced in the political process to be overly optimistic that he'll get all these new authorities. "Do I wish I had those tools available? Yes," he says. "Have I talked to OMB about it? Yes. Will I get it? I don't know." But if he does, Peck believes, "I think we could see some of these renovations happen quickly."