Property Management WorkshopPerspective & Policy Outlook

May 20, 2013

Carmelo Melendez, EngD, PE, PMP, CFM, LEED-GADOE Senior Real Property Officer

Director, Office of Property Management, Office of Acquisition & Project Management

• Promote a Culture of “Management & Operational Excellence” in Property Management & Acquisition

• Enable a “Performance – Based Culture” based on:- Communicating Cross Functionally- Leveraging our Infrastructure & Inventory- Fostering a Smart Regulatory Environment- Linking Assets & Work Plans to Mission Goals & Objectives- Integrating Data to Qualitative Analysis for Decision Making

“Culture Eats Strategy For Breakfast Daily”- Peter Drucker

Vision Statement

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Why are we here?

Background

• The Property Clause of the U.S. Constitution states:- “The Congress shall have the Power to dispose of and

make all needful Rules respective the Territory and other Property belonging to the United States…”(Art 4, Sec 3, Cl. 2 of the Constitution)

• Types of Government Property- Real Property

• All interests, benefits, and rights in the physical land & structures attached to land

- Personal Property• Movable items that are not permanently affixed to, and part of land

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Property Accountability Tenant

• Property Management is a Physical & Financial Mission Enabling Practice

• Responsible & Accountable Roles- HQ MA & PO

• Programmatic, Strategic & Policy

- Program Offices & Site Managers• Determine & Identify Mission Requirements Based on Strategic Direction• Execute Mission Objectives by Acquiring, Maintaining, Controlling, and Disposing

Property

"We must have no carelessness in our dealings with public property orthe expenditure of public money. Such a condition is characteristic ofundeveloped people, or of a decadent generation.” - Calvin Coolidge

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MA-60Paul Bosco

Director

David BoydDeputy Director

MA-66David Brown,

DirectorSys & Prof Dev

MA-661Linda Ott

Professional Development Division

MA-662John Makepeace

Acting,Systems Division

MA-65Carmelo Melendez,

DirectorProperty Mgmt

MA-651Mark PriceReal Estate

Division

MA-652Monja VadnaisFacilities & Infra.

Division

MA-653Sarah Ball

Personal Property Policy Division

MA-64Mark Brady Tomasoni,Director

HQ Proc Svs

MA-6401Barry Ross

Corporate Services Office

MA-642John Harris

Ops Division B

MA-6421Ryan Miller

Ops Branch B-1

MA-6422Donna Cook-Williams

Ops Branch B-2

MA-6423Albert ManleyOps Branch B-3

MA-641Richard LeottaOps Division A

MA-6411Arness HarrisOps Branch A-1

MA-6412Matthew ParkerOps Branch A-2

MA-6413Timothy Jackson

Ops Branch A-3

MA-63Michael Peek,

DirectorProject Mgmt

MA-631John White

Project Assessments Division

MA-632Melvin Frank

Project SystemsDivision

MA-62Patrick Ferraro,

DirectorContract Mgmt

MA-621David LeottaField Asst &

Oversight Division

MA-622Scott Clemons

Strategic Programs Division

MA-61Berta Schreiber,

DirectorPolicy

MA-611Jacqueline Kniskern

Contract & Fin Asst Policy Division

MA-612Robert Myers

Contractor HR Policy Division

Jay GlascockSenior Technical

Advisor

The Office of Acquisition and Project Management (APM)

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Who are we?

Mission Statement

• Add value to acquisition, property and project management for the Department and the U.S. taxpayer, through policy, guidance, oversight and financial assistance and contract execution.

• Provide SME actionable advice in:- Real Estate- Facilities & Infrastructure Management- Personal Property Management

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Why our organization

exists?

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Operational & Tactical• Operational:

• Policy, Guidance and Oversight of Property Management Practices & Responsibilities• Leverage Property As Mission Enabler

• Tactical:• Conduct Real Property & Personal Property Validation Assessments• Facilitate Personal & Real Property Governances• Agency POC to OMB, GSA, and External Stakeholders• Establish Training Objectives & Curriculum for Personal Property and Realty

Specialist• Real Estate Policy

- Obligate/Sign for Selected Real Estate Actions- Real Estate Desk Guide & Certification for Realty Specialists

• Facilities & Infrastructure Policy- DOE O 430.1B RPAM Series- SRPO support functions

• Personal Property Policy- DOE O 580.1A PPM Series- Agency Fleet Coordinator

What do we do in MA-65?

Assess, Assists, & Advocate by Being

Responsive, Relevant, & Reliable

SRPO & HRECA Delegations

DOE Senior Procurement Executive

Secretary of Energy

ContractingOfficers

ContractingOfficers

ContractingOfficers

Heads ofContracting Activities

NNSA Senior ProcurementExecutive

ContractingOfficers

ContractingOfficers

ContractingOfficers

Heads ofContracting Activities

Chief Acquisition Officer

Under Secretary / NNSA

Senior Real Property Officer & Head Real Estate

Contracting Activity

Certified Realty

Specialists 8

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Geographic Diversity

How many Sites do we have?…It depends if ...

• ≥ 150K GSF• ≥ 100 Bldgs• ≥ 150 People

Then

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Where are we?

Portfolio by the Numbers

• Real Property Records: > 19,000• Replacement Plant Value (RPV): > $120 Billion• Acres: > 2.3 Million • Facilities: > 10,000• Gross Square Footage: 117 Million• Other Structures:> 7,000• Property & Equipment Records: > 700,000• Property & Equipment Value: > $18 Billion• Fleet Assets: > 14,000• Federal Property Professional: 35• Federal Certified Realty Specilists:19• Federal Certified Facilities Managers: ??? 10

GAO High-Risk List

• GAO-13-283 High-Risk Series- Contract Management deemed as high-risk area

• Includes contract administration & project management- Managing Real Property deemed as high-risk area

• Since 1990…What’s the Problem?- Inadequate (Federal) Management- Inadequate (Federal) Oversight- Lack of Accountability- Non-Compliance with Departmental Policies- Lack of Consistent, Accurate, and Useful Data - Holding of Excess and Underutilized Property- Reliance on Costly Leasing Practices- Challenges in Securing Property

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Federal Government's Report Card

• Property, Plant, and Equipment (PP&E) and Inventories and Related Property- “The federal government could not satisfactorily determine that

property, plant, and equipment (PP&E) and inventories and related property were properly reported in the accrual-based consolidated financial statements. . . .”

• Controls on Property Recordation, Inventories & Validations were seen as “over burdensome and not cost positive” by Some Agencies & Their Support Contractors

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Impact to Mission Readiness

• “Deficiencies in internal control over assets could affect the federal government’s ability to fully know the assets it owns, including their location and condition, and its ability to effectively:- safeguard assets from deterioration, theft, or loss; - account for acquisitions and disposals of assets and

reliably report asset balances; - ensure assets are available for use when needed; - prevent unnecessary storage & maintenance costs or

purchase of assets already on hand; - Determine full costs of programs using assets.”

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Property Liabilities

• $ Obligated to Correct Deficiencies capacity, capability, availability

• $ Spent to Procure Unneeded Items• $ Committed for Unnecessary Storage Costs &

Caretaker O&M• Mismanagement, Deterioration, Losses are an

Unwanted Focus on your Operations • Distraction instead of an Enabler

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Value Proposition & Perspectives

• You are the experts in acquisition, property and project management for the Department

• You help our coworkers achieve greater efficiency and effectiveness with acquisition, property and project management solutions.

• RPM Its All about Capacity, Condition & Availability• PPM its All about Positive Control & Life Cycle

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What you give when working with our

coworkers?

Perspective

• Today: We have Mission-Ready Real & Personal Property

• Adjustment to Fiscal Reality & Greater Oversight

• Map Property to Program Core Capabilities

• Unnecessary Costs for Storage & Maintenance

• Update our Asset Management Plan• Work closer with EFCOG to Find

Agency-Internal Solutions & COAs• Optimize the use of GSA Tools

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Policy Outlook

• Current and Pending Legislation and OMB policy will Heightening the Focus on Reducing Real Property Spending

• OMB’s “Freeze the Footprint” will be expanded from Admin/Warehouses to Laboratories

• OMB’s Greater Scrutiny of Alternative Finance• Recurring GAO Engagements on Real Property Utilization,

Disposal, and Costs• Expansion of GAO Engagements to Personal Property• People, Space, and Technology Essential to Making

Property not only Cost-saving, but also Productivity- and Engagement-boosting.

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Policy Development

• Establishment of Real Estate Contracting Officers• Guidance for Long Term Lease Actions• Guidance on Implementation of Federal Building

Personnel Training Act• Refined Guidance for TYSP• Guidance on Fleet Management Accountability• Refined Guidance on PP Assessments & BSC Use• Review Policies, Processes, Systems, and People

"Conscious or consciousness is the great teacher, not consequence“- Unknown

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High Risk Corrective Actions

• Maintain Sound Asset Level Data- Analyze Data and LCC for Decision Making

• Review Current Land & Facilities Inventory- Consolidate, Collocate, and Dispose of Unneeded Property

• Maximize Occupancy of Owned/Existing Facilities- Minimize Dependency on Commercial Leasing

• Allocate Security Resources & Technology- Utilize Risk Management Models

• Maintain Adequate Proficiency and Involvement- Accountability & Core Competencies

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Goals & Opportunities

• Maintain Mission-Ready Assets & Optimize Inventories• Get out of High Risk List for Property • Assist Coworkers with Reutilization – saves both

unnecessary procurements and disposal costs• Focus on Planning, Disposal, & Asset LCC for TCO• Adopt a Facilities Management Certification Program• Reinforce Acquisition and O&M Direction

- Upfront planning, cost estimates and critical reviews• Develop Joint Land Use Plans – Technology Parks • Enhance eIT tools (A/T/V): FIMS, GSA Fleet, PPM PIDS• “Refine” Policy: Need to Hear from You

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Closing Remarks & Take Away

• DOE Property is “the people’s property”- Stewards of the U.S. taxpayer

• Enable Mission not be a Distraction or a Liability- Security, Science, Energy, Environment

• Divergent D.C. Pressures Remain• Support the Leadership with “Savvy Realism”• Share your Knowledge & Experience

“Property Management is no big deal, until it’s a big deal – and then it’s a really big deal!” – Mike Hay, NPMA

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Questions & Backups

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F&I Essential Elements of Information

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Real Estate Essential Elements of Information

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PPM Essential Elements of Information

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Status of Real Estate Tools and Alternatives

• 10 CFR 770 Transfer of Real Property for Econ Dev - Update at OMB

• Enhanced Use Leasing (EUL)- Legislative proposal non-concurred by OMB in 2011- DOE has limited authority under the Hall Amendment

• Public-Private Venture/Partnership- Lease-Purchase legislative proposal non-concurred by OMB in 2013

• Long Term Leasing - Guidance Drafted

• Alternative – Use GSA’s Special Exchange Authorities - Acquisition Exchange (Interest in Real Estate)- Exchange for Services (Construction)- Historic Property Outlease/Exchange 26

Thoughts on the Facilities Planning

• Link Space Standards to Mission and Culture• Understand the People and their Jobs• Know your Constraints• Consult Benchmarks• Understand the Cost of Space• Communicate Clearly and Regularly• Top Leadership support is critical for success• Plan as workload driven but resource constrained

“A vision without a plan is a dream, a plan without avision is a nightmare” – Japanese Proverb

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Major Real Property Sites

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Major Real Property Sites

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Major Real Property Sites

Major Property Sites

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AF Benefits

• Budget for obligations under lease, not entire cost of asset

• Obtain use of asset faster than w/ line-item• Avoid ownership where need is shorter-term

AF Requirements

• OMB must score as operating lease per A-11• Operating lease score required for budgeting

benefits• Capital lease score would require budgeting entire

lease cost in first year

OMB A-11, cont.

• Criteria for operating lease:- Lessor owns asset, Govt. can’t buy at end of lease- No bargain-price purchase option- Lease term ≤ 75% of asset’s economic life - Total lease payments ≤ 90% of asset’s market value- General purpose asset, no unique Govt. specifications- Private-sector market exists for the asset

Message of A-11

• Operating leases intended for:- Relatively short-term need

• Long-term need would favor purchase, not lease- Asset capable of non-Govt. use when lease ends- Asset likely to be used by private sector when lease ends

DOE and AF

• Track record of successful projects• 13 proposals, 8 received OMB concurrence• Process, per DOE AF Guide:

- Sites (or M&Os) develop proposals- Programs submit proposals to HQ for review- MA leads HQ review team with GC and CFO- CFO submits proposal to OMB

AF Prospects

• Viable option where criteria can be met• Remote DOE sites may lack private-sector market• Some DOE missions/asset needs not “general

purpose”• MA stands ready to support well-developed

proposals

GSA Transactional Authorities

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FRPP Snapshot from FY-11

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Department of Energy

FY2011 DOE and Power Administration Site Summary

OwnershipBuilding & Trailer OSF Land

Acreage Maintenance Cost Operational Cost**Count GSF RPV Count RPV

DOE Owned 10,713 116,065,484 $57,468,777,019 7,799 $40,686,692,794 837,871.75 $1,206,377,481 $763,455,787

DOE Leased 61 1,203,598 $168,550,621 3 $2,946,248 9,137.45 $0 $27,940,578

Contractor Leased 312 7,373,174 $2,196,687,948 13 $3,504,744 490.13 $1,356,440 $202,878,061

GSA 53 3,875,631 - - - - - 76,344,975

Withdrawn Land - - - - - 1,438,780.08 - -

Other Ownerships* 30 374,961 $0 147 $15,782,873 589,410.67 $3,780,503 $85,789,194

TOTAL 11,169 128,892,848 $59,834,015,589 7,962 $40,708,926,659 2,875,690.08 $1,211,514,424 $1,156,408,595

* For Buildings, Trailers, and OSF's, the Other Ownerships include Contractor License and Permits. For Land, Other Ownerships include Institutional Controls and DOE Ingrants which represent Easements, License, Long Term Interest, Permits, and Other.

** Operational Cost for DOE Owned includes Electricity, Water, Pest Control, Central Heating, Central Cooling, Gas, Refuse, Recycling, Grounds, Janitorial, and Snow Removal costs. For DOE Leased, Contractor Leased, and Other Ownerships, Operational Cost includes the Annual Rent and Other Cost. For GSA ownership, Operational Cost includes the Total GSA Rent Bill-Annual cost.

NOTE: Hyphens represent data fields that do not apply for the ownership designation.

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