TABLE 3.-Comparison of Army estimated space requirements after relocation with present space allocation

We reviewed the studies on which the planned space reductions are based and found them to be essentially space economies attributed to consolidation of like activities and improved space characteristics. Although we questioned the degree to which these factors could account for the space reduction of nearly 75 percent and found that some of the space listed above had already been vacated at CAC, we did not find it pratcicable to determine the extent to which the present space requirements could be compressed. Such a determination would require a complete management-engineering study. However, as shown on page 20, we did make a theoretical projection of savings on the basis of assumption that equal compression could be accomplished at CAC and that it would be feasible to move additional tenants to CAC from downtown rental space.

Current CAC costs understated.-Apparently the understatement of current CAC costs occurred because of the use of data for years prior to fiscal year 1960. Our computations are based on space occupied, personnel serviced, and budgeted operating costs of the important tenants at the time of our review in January and February 1960. (See schedule D attached.) As our computations show larger current costs than those used by the Army, they increase the potential savings; however, these savings only partially offset the Army's understatement of costs at the new locations as shown in table 1 above.

Inaccurate allocation of CAC costs.-The Army allocated CAC support costs on the basis of space occupied by the various tenants, in fiscal year 1959, including the CAC support element. Since CAC itself occupied about 27 percent of the total space, the Army allocated $525,000 of CAC costs to its own support, thus reflecting a total saving in this amount if CAC is closed. Since CAC largely exists only to support its tenants, the full amount of the support costs except for administrative overhead pertaining solely to the CAC support function should have been distributed to the tenant activities. Also the CAC space utilized by the respective tenants as well as the relocation needs of DOD tenants had altered materially by March 1960, when occupancy was as shown in schedules C and F attached. We have computed the support costs as shown in schedule A, attached, on the basis of the most current cost and space data. While our redistribution of CAC support costs would indicate that substantially larger portions of those costs are being borne by the tenants than are shown by the Army, they do not affect the projected savings since those are based on total elimination of CAC costs compared with independently computed support costs for the new locations. The Army estimates of reduced costs are based on an adjusted national average support cost per square foot, adjusted for leased and Government-owned space rates, applied to drastically reduced space needs for each of the military tenants at the new locations, as shown by the following data from their estimates.

Intangible management considerations.-Even more difficult to evaluate are the underlying management and technical improvement factors which apparently motivate the proposed moves. Since these are largely intangible, they cannot be accurately evaluated in advance; we therefore can only state the nature of these considerations as they appeared during our study.

The principal question appears to revolve around the relative advantages and disadvantages of centralized or decentralized research and development operations and the relative merits of Chicago and Natick for dealing with the food industry, trade associations, and academic groups in the conduct of Quartermaster programs and in the general intellectual and academic endeavors of individual employees.

The Food and Container Institute is responsible for programs and technical projects approved and assigned by the Headquarters, Quartermaster Research and Engineering Command, for basic research and development in food nutrition, stability, and acceptance; military rations and food products for the Armed Forces; containers for which QM is responsible; and irradiation preservation processes. The institute is responsible also for the applicable research and engineering standardization program and for necessary technical services and engineering support to other military activities. The institute coordinates its activities with food and container industries, universities throughout the country which participate through research contracts, military departments, and governmental agencies which have related interests. As of March 1960, the institute was authorized 57 military and 252 civilian employees, of which 104 were classified as scientific or technical employees. The institute operates a number of specialized laboratories employing heavy specialized equipment.

There is no uniformity of opinion within the technical staff of the Research and Engineering Command. On the one hand, we have been told by technical and scientific personnel at both Chicago and Natick that the separation deprives personnel at both locations of one of the most important factors in the research and engineering climate; that is, the opportunities for interaction between individuals of different backgrounds and capabilities, sparking new ideas and unconventional approaches, permitting many types of critical appraisal, and stimulating healthy technical competition.

On the other hand, the case is made that the loss of the material assistance and the close daily contacts between the scientific and technical staffs of Food and Container Institute with their counterparts in the food industry in Chicago, developed over many years, would be a loss to the Government. Closely related are the problems of recruitment and retention of qualified technical staff.

We were unable to determine the possibile effect of relocation on the liaison and transportation requirements. Our review of the statistics presented as to the numbers of transactions directly involving the Quartermaster Research and Engineering Command at Natick, and Food and Container Institute at Chicago, compared with each other, the need for contacts with research and development contractors, trade and industry groups, and others, did not provide a satisfactory basis for an estimate.

In the area of animal housing and testing, it appears that the facilities at Maynard, Mass., operated by the Headquarters, Quartermaster Research and Engineering Command, are an improvement, comply with community health rules, and would provide for any necessary expansion in the testing programs. Possible savings through full utilization of the CAC

At the time of our review in January-March 1960, the Army activities listed below occupied 319,190 square feet of space in Chicago, Ill., at annual rentals of $1,067,093, while there were at least 294,971 square feet of vacant space at CAC.

In addition to the Army activities listed above, non-Army Government agencies leased about 1,259,284 square feet of downtown office space at annual rentals of about $3,376,280, making totals of 1,578,474 square feet at $4,443,373. Of the space occupied by the above-listed activities, 1,161,074 square feet is office space and 417,400 square feet is warehouse space. The space available at CAC is as follows:

Possible savings through theoretical compression of present tenants.-Determination of the extent to which the space now occupied by CAC tenants could be compressed requires a full management-engineering study which we were unable to perform in the limited time available. If it be assumed that these tenants could be compressed into the same space as projected for the new locations, the present CAC support costs would not be reduced. However, if it be further assumed that the addition of space thus available could be used by the activities now renting downtown space, the following would result :

TABLE 4.-Comparison of downtown rental costs with theoretical costs for full utilization by compression of present tenants

I. Downtown rentals of potential additional tenants for CAC:

Computation of possible additional space:

CAC space presently occupied by military
tenants---

Planned space at relocation sites___

Theoretical space compression_.

Present vacant space-.

square feet__
_do____

994, 300

-266, 695

$425, 748

1, 067, 093

1, 000, 951

$2,493, 792

$641, 571

$221, 222

$314, 585

$1, 177, 378

Convert to annual charge on 7-year amortization basis
($8,773,496÷÷÷7).

1, 253, 357

Total CAC annual costs for potential new tenants__ 2, 430, 735

III. Annual savings if compression is possible and it

is feasible to move the new tenants to CAC:
First 7 years (item I less II) per year-
Thereafter:

Annual downtown rent.

Annual CAC maintenance_.

Annual savings___

63, 057

$2,493,792

1, 177, 378

1, 316, 414

Further, although a preliminary analysis of the possible movement of nonArmy tenants from downtown leased commercial space to CAC in the event that the present Army tenants are relocated indicated that additional savings could be achieved, the considerations affecting the practicality of such moves are so varied as to require independent study with respect to each possible tenant, and we were unable to do this within the relatively limited time available. These considerations, which are equally applied to the hypothetical movement of such downtown tenants into CAC in the event of compression of the present tenants, as discussed above, also include plans which we understand are being made for the construction of additional Government-owned office space.

In our opinion, therefore, the possibilities of the most economical use of the CAC facility should be studied further by the General Services Administration in relation to all of these factors before a final decision is made regarding the ultimate use or disposal of this facility.

Possible savings through utilization of present vacant space at CAC.-The following portions of our analysis are directed at the possible economical usage of the CAC space which is now vacant and is limited to potential additional military department tenants at CAC since, as will be noted below, the present available vacant space at CAC would be fully occupied by possible additional military tenants, provided that they could all be moved to that location.

In this connection, we were unable to find evidence that active effort had been made by the Army to secure additional tenants for CAC since 1956. At that time the Corps of Engineers made inquiry of officials of military activities located in the Chicago area as to possible use of space in CAC. The responses evinced little interest, the reasons given being typified by the following:

1. Location at CAC would require undesirable separation of functions. 2. A central downtown location is necessary for easy access to transportation and hotels.

3. Such undesirable location would result in critical and unnecessarily costly recruiting problems.

4. Excessive travel time would be required.

5. Possible savings in rental or related costs would be offset by other costs, such as transportation, communications, and overtime.

We also ascertained that the Army certified to GSA on October 11, 1957, the need for 276,193 square feet of space in new Government office buildings being designed for downtown Chicago to house its agencies presently leasing commercial space in Chicago. We have not evaluated the effect upon this need if these activities were moved to the CAC. We noted, however, that the Army did not include the military activities now occupying Government-owned facilities (including CAC) in the certification.

In order to show the full potential savings which could accrue, we have proceeded on the assumption that sufficient space could be found at CAC to accommodate all the possible additional Army tenants, if this were found to be advantageous, even though the present vacant space is somewhat less than would be required. We believe that this is justified in view of the continued adjustment of space in use which affects CAC and the probability that the activities presently housed there could be compressed to some degree if necessary.

Since very little of the space available at CAC is office space, movement of the above-listed activities to that location would involve costs for suitably converting the present space, as well as the actual movement costs. Further, since the space available is scattered throughout the three six-story buildings, it would be necessary to make some relocations of present tenants. We have computed the costs of moving the potential new tenants into CAC exclusive of the costs of re