200 Third Street, one of several buildings the Bureau of Public Debt occupies in Parkersburg, WV

As we reported in two recent Spotlight pieces, President Obama’s FY 2013 budget proposes consolidating two U.S. Department of the Treasury bureaus—the Bureau of the Public Debt (BPD) and the Financial Management Service (FMS)—into a single organization with a budget of $308 million.  Once merged, these two operational arms of Treasury’s Office of Fiscal Service will simply be named the Fiscal Service.

When they announced the proposed consolidation in February 2012, Treasury officials said they expected the move to save $36 million over five years “through management, administrative and support service efficiencies.” While the Senate Appropriations Committee adopted the proposal earlier this summer, full Congressional approval is needed before funding can be appropriated and the plan can be implemented. A final decision probably will not be made for several months, since Congress is expected to pass a several-month FY2013 Continuing Resolution sometime in September.

Plans for the merger are proceeding, however, in a manner that has West Virginia leaders breathing a sigh of relief while those in Maryland and Prince George’s County are fuming. On August 22, a BPD spokesperson announced that Treasury will relocate 450 jobs from the FMS office in Metro Center II at 3700 East West Highway in Hyattsville, Md., to BPD’s operations center at 200 Third Street in Parkersburg, W.V., over a three-year period that may begin as early as next summer or as late as February 2014. The jobs to be relocated consist primarily of accounting and information technology positions as well as some management functions and related support departments. The BPD spokesperson said the move is expected to save the federal government $96 million over a five-year period.

West Virginia Democratic Senators Jay Rockefeller and Joe Manchin both released statements on August 29 applauding the decision. That same day, Rep. Donna Edwards (D-Md.) issued a news release expressing her disappointment with the decision; Maryland Senators Barbara Mikulski and Ben Cardin, as well as Reps. Steny Hoyer, Chris Van Hollen and Elijah Cummings (all Democrats) attached statements in which they also condemned the move. While the Maryland representatives slammed GSA for the decision, a GSA spokesperson told the Washington Business Journal that GSA played no role in deciding where to locate the merged functions, noting that Treasury had acted on its own.

There is at least one more chapter to unfold in this story. The FMS’ 393,000 rentable square foot lease is due to expire at the end of this month and congressional prospectus approval is required for the agency to extend the lease for the three to five years required to affect the transition to Parkersburg.  Rep. Donna Edwards, whose district is squarely impacted by the relocation, has vowed to fight the move, which she describes as “direct redlining [by GSA and FMS] that is going on in the suburban metropolitan area, in Maryland, in Prince Georges County”. Her emotional floor speech at the House Transportation and Infrastructure Committee markup hearing on July 26th led her fellow congressmen on both sides of the aisle to agree to remove the FMS prospectus from the list of resolutions the House had slated to approve. Donna Edwards has vowed to fight this move and the lease extension prospectus will require the approval of the committee on which she serves.

Dr. Dorothy Robyn testifying before Congress earlier this year.

Acting GSA Commissioner Dan Tangherlini has picked Dorothy Robyn, deputy undersecretary of defense for installations and environment at the Department of Defense (DoD), to be the new Public Buildings Service (PBS) commissioner. Tangherlini also abolished the PBS board of directors “to ensure [Robyn] has the appropriate authority she needs to lead PBS,” he said in an email to GSA staff yesterday (September 4). He called Robyn’s hiring the “next step forward” in GSA’s effort to “refocus this agency on our mission to deliver value for taxpayers and consistent, effective and responsive services for customer agencies.”

As DoD’s senior real property officer for the past three years, Robyn (pronounced “row-bine”) closed out the most recent round of the Base Realignment and Closure (BRAC) process and oversaw DoD’s 539,000 military installations across the world, including more than 29 million acres of land, 300,000 buildings and 2.2 billion square feet of building space.

While at the Pentagon, she pushed DoD to adopt cutting-edge technology to enhance energy efficiency, encouraged the development of sustainable military facilities and oversaw the military’s “energy test bed” project, which provides grants to companies that test new energy concepts on military bases. Tangherlini said in his email that Robyn’s experiences managing BRAC activities and promoting environmentally friendly DoD buildings “make her uniquely qualified to manage the extensive inventory of the Public Buildings Service as well as the task of disposing of excess and underutilized properties,” and added that her work at the Pentagon often required coordinating with GSA on major real estate decisions, giving her “valuable experience working with GSA.”

Robyn is the first senior official to be hired by Tangherlini since he took over from former GSA Administrator Martha Johnson in April, following the Las Vegas 2010 conference scandal. She will replace acting PBS Commissioner Linda Chero, who was appointed to take over for Bob Peck after Johnson fired him shortly before she handed in her own resignation. (Last month, Gensler hired Peck to head its Southeast region workplace design consulting practice.)

Which small agency within the U.S. Department of the Treasury auctions and issues more than $9 trillion in securities every year? The Bureau of the Public Debt (BPD)—under authority derived from Article I, Section 8 of the Constitution, which empowers Congress to borrow money on the credit of the United States—borrows the money needed to operate the federal government and accounts for the resulting debt. It does this by selling Treasury bills, notes and bonds (as well as $195 billion in U.S. Savings Bonds each year), and then redeeming investors’ securities. It also provides administrative, financial management and information technology services to other federal agencies on a fully reimbursable basis through its Administrative Resource Center (ARC).

The bureau is responsible for six programs:

  • Wholesale Securities Services, which ensures that the government’s critical financing needs are met and that the integrity and efficiency of primary and secondary markets for Treasury securities are maintained;
  • Government Agency Investment Services, which offers specialized investments for government entities at the federal, state and local levels;
  • Retail Securities Services, the public’s source for information about U.S. Treasury products and services, which serves more than 55 million investors in Treasury securities;
  • Summary Debt Accounting, which provides policy, direction, guidance and leadership for managing the public debt (including reconciling more than $77 trillion of securities transactions and related cash flows annually);
  • ARC Franchise Services, which provides administrative and information technology services to more than 70 federal agencies, including all of Treasury, the National Aeronautics and Space Administration, the Social Security Administration and the Department of Homeland Security; and
  • The Do Not Pay Business Center, which aims to prevent improper payments through programs funded by the federal government.

While BPD’s headquarters office is at 799 Ninth Street, N.W., in Washington, D.C., about 95% (between 1,850 and 1,900) of its nearly 2,000 employees are based in Parkersburg, WV. The bureau has had a presence in Parkersburg since 1954, when the city—because of its location in a rural, “non-critical target area”—was designated as a relocation site for BPD in the event of a national emergency. In 1957, Parkersburg became home to the bureau’s new electronic processing center and its “Great Brain,” a first-generation, 25-ton, 6,000-square-foot computer; between 1993 and 1996, BPD consolidated and transferred most of its operations to Parkersburg.

As we reported last month in our Spotlight piece on the Financial Management Service (FMS), President Obama’s FY 2013 budget proposes consolidating BPD and FMS into a single organization (with a budget of $308 million), to be called the Fiscal Service. This would enable the Fiscal Service to achieve greater operational and administrative efficiencies by combining the two agencies’ resources.

With the November election approaching, the topic of federal workforce reduction looms ever larger. The Republicans unveiled their Platform last Tuesday night (August 28th) and in it asserted their desire to reduce the federal payroll by 10%, to be implemented through attrition. The effort is not new, numerous Republican-sponsored bills were proposed in both the House and Senate last year outlining various proposals for cuts to the federal employment and payroll. Most bills have very remote odds of becoming law but if the Republicans gain a majority of the House and Senate next year it seems likely that legislation will be passed to trim the federal workforce and, ultimately, reduce demand for federal leased office space. To get a sense of what this new legislation could look like here are profiles of two bills representing recent congressional efforts:

H.R. 3029, Reducing the Size of the Federal Government Through Attrition Act
 Sponsor: Rep. Mick Mulvaney (R-SC)
Status: Approved by House Committee on Oversight and Government Reform

H.R. 3029 requires that the President reduce the number of federal employees 10% within three fiscal years, and that the reduction is maintained thereafter. The Act specifically orders that this reduction is achieved through attrition such that “agencies shall appoint no more than 1 employee for every 3 employees retiring or otherwise separating from Government service”. In the event an agency has not complied with the 10% reduction metric it is prohibited from hiring any new employees.

However, the Act allows the President to waive these requirements with respect to positions in an agency that the President determines are critical to the agency’s performance or mission. The Act also provides for waivers in the case of national emergencies or security concerns. As a result, the Congressional Budget Office report on the impact of this bill assumed that workforce reductions will only apply to a portion of federal employment, resulting in a total employment reduction of 70,000 federal jobs and a savings of $35 billion in the 5-year period following enactment of the legislation.

(Senator Ron Johnson (R-WI) introduced an identical sister bill, S. 1611, in the Senate.)

S. 1476, Federal Workforce Reduction and Reform Act Sponsor: Sen. Orrin Hatch (R-UT)

Status: Referred to Committee

S. 1476 includes provisions similar to H.R. 3029 and S. 1611 but it goes even further. The bill seeks a workforce reduction of 15%, albeit over ten years, and it is careful to require that the same reduction apply to contract employees. Though it provides waivers in the case of national emergencies or security concerns, it does not identify any other exemptions. The bill also seeks to substantially limit travel costs for all agencies except the Department of Defense and it freezes pay and eliminates bonuses through 2014 (through calendar year 2014 for pay and fiscal year 2014 for bonuses).

These are just two examples of workforce reduction bills introduced in Congress, but there have been many introduced since the beginning of last year including H.R. 3662, H.R. 3494, H.R. 3487, H.R. 2114, H.R. 1779, H.R. 657, H.R. 408, H.R. 235, S. 2065 and S. 178.

First Labor Day Parade on September 5, 1882, New York City

Today marks the nation’s 118th official celebration of Labor Day, established by law in 1894 when Sen. James Henderson Kyle of South Dakota introduced S. 730 to make Labor Day a federal holiday on the first Monday of each September.  It’s roots extend back even before that. The first true Labor Day occurred on September 5, 1882 when New York’s Central Labor Union passed a resolution “that the 5th of September be proclaimed a general holiday for the workingmen in this city.” In celebration, many of New York’s unions held a parade in the city’s Wendel’s Elm Park at 92nd Street and 9th Avenue. Thus was borne, as the Department of Labor describes it, “the yearly national tribute to the contributions workers have made to the strength, prosperity, and well-being of our country.”

Labor Day was originally intended as a celebration of organized labor but we note that union membership is now on the wane. A report issued by the Bureau of Labor Statistics (BLS) earlier this year reported that in 2011, the union membership rate–the percent of wage and salary workers who were members of a union–was 11.8% (14.8 million members). Compare that to 1983, the first year for which comparable union data are available, and we find that the rate of union membership has been nearly halved. The union membership rate in 1983 was 20.1% and there were 17.7 million union workers.

Though private-sector union membership has waned substantially, government participation has held strong. 2011 data shows that 7.6 million employees in the public sector belonged to a union, compared with 7.2 million union workers in the private sector. The union membership rate for public-sector workers (37.0%) is markedly higher than the rate for private-sector workers (6.9%).

Within the public sector, local government workers had the highest union membership rate, 43.2%. This group includes workers in heavily unionized occupations, such as teachers, police officers, and firefighters.  However, federal unions have a solid base as well.  Today 28.1% of federal workers belong to a labor union or an employee association similar to a union. The number increases to 33.2% when we further include all federal employees whose jobs are covered by a union or an employee association contract. That number has declined slightly in the past decade but federal unions still remain a force to be reckoned with.

Unsurprisingly, the unions have thrown their weight behind President Obama’s re-election campaign. This, especially, as one plank of the Republican platform unveiled in last week’s convention calls for a 10% reduction in the federal payroll. Bills circulating in both the House and Senate suggest that the Republican party intends to reach its goal primarily through workforce reductions. H.R. 3029 calls for a 10% reduction in the total number of federal employees within three years and S. 1476 calls for a 15% reduction within ten years. If this 10% – 15% reduction were applied to GSA’s lease portfolio it would equate to a 19 – 29 million square foot decrease in GSA’s inventory (this assumes the reduction is applied to the entire non-Postal federal workforce though, as a practical matter, some agencies will be exempted) . As we consider the potential implications of the November elections, this issue is one that could have a substantial impact on the federal government’s demand for leased space.

American Federation of Government Employees marching in 1987 Labor Day Parade