DALLAS – The lack of full funding for a proposed $2 billion replacement of the FBI’s aging headquarters building in downtown Washington led to the cancellation of the project, agency officials told a Senate panel on Wednesday.
The General Service Administration and the FBI decided in July to pull the plug on the proposal to swap the J. Edgar Hoover Building with private investors who in turn would build a new facility outside the city.
Michael Gelber, acting commissioner for public buildings at GSA, told lawmakers on the Senate Environment and Public Works Committee that a $882 million gap between what the project was expected to cost and what Congress appropriated for it was the primary reason behind the decision.
A total of $1.4 billion of construction funding for the project was sought in President Obama’s fiscal 2017 budget request, with a request for $759 billion from the GSA and $646 million from the FBI, Gelber said.
However, the omnibus budget measure for fiscal 2017 adopted by Congress in May allocated only $200 million to GSA for the project and $323 million for the FBI, he said. Congress appropriated $390 million for the FBI move in the fiscal 2016 omnibus budget.
“As a result, GSA decided in consultation with the FBI, to cancel the procurement,” Gelber said. “It is fair to say that the cancellation of the procurement was not the desired outcome.”
Building projects must be fully funded by Congress before the GSA can sign a construction project under rules of the Office of Management and Budget, which can be a problem with a project the size of the FBI proposal, he said.
“Up-front funding can be viewed as an impediment to making key investments, but under the current scoring regime it is also the way which we transparently record federal spending,” Gelber said.
That policy does not work well for projects as large as the FBI building, said Sen. Benjamin Cardin, D-Md.
“That’s more than $1 billion that Congress has to appropriate for one project in a single year,” he said. “That’s just not possible.”
The GSA has spent $20 million on the project that cannot be recovered unless the project is revived, Gelber said.
The latest estimate is that building a new facility that could accommodate all the FBI employees in the Washington area would cost the government $1.6 billion in addition to what it would realize from the sale of the current headquarters to developers, Gelber said.
Gelber said he was reluctant to provide details during the open session on how much the GSA could be expected to receive for the property. “That valuation should be determined by the market,” he said.
The wiring in the Hoover Building and its thick concrete wall cannot accommodate the computers and other equipment used to fight crime and terrorism, said FBI chief financial officer Richard L. Haley.
“Simply put, the J. Edgar Hoover Building is obsolete, inefficient, and faces a number of security vulnerabilities,” he said. “The building itself is literally falling apart as evidenced by crumbling facades and deteriorating infrastructure.”
A new proposal for a new facility replacing the Hoover building will be presented to Congress within 120 days, said Gelber and Haley in response to a request by committee chairman Sen. John Barrasso, R-Wyo.
“It is clear from today’s testimony that the FBI needs a new headquarters and that fixing up the Hoover building with its $100 million backlog of maintenance needs makes little sense,” Barrasso said. “The elaborate plan to swap the Hoover building for a new headquarters facility was, in hindsight, not the best option.”
The committee intends to hold another hearing on the FBI proposal before the end of the year, Barrasso said.