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AFTERNOON SESSION Mr. WRIGHT. The subcommittee will be in order. Our witness for the afternoon is Mr. Robert L. Kunzig, Administrator, General Services Administration. As the committee knows, General Services Administration has jurisdiction over a broad variety of Federal buildings projects. We have been actively and closely associated with Mr. Kunzig and his predecessors and are anxiously looking forward to his testimony. Mr. Kunzig, as a formality, the subcommittee requires a taking of oath by those who testify, if you would not object. Do you solemnly swear that the testimony you give to the subcommittee will be the truth, the whole truth and nothing but the truth, so help you God?

(Mr. Kunzig answered in the affirmative.)

Mr. WRIGHT. You may proceed in such fashion as you desire, either reading the statement directly or inserting it in the record and summarizing it. It is a good statement.

TESTIMONY OF ROBERT L. KUNZIG, ADMINISTRATOR, GENERAL

SERVICES ADMINISTRATION; ACCOMPANIED BY WILBUR SANDERS, DEPUTY COMMISSIONER OF THE PUBLIC BUILDINGS SERVICE; WILLIAM E. CASSELMAN, GENERAL COUNSEL; WILLIAM A. BUTTS, ACTING ASSISTANT ADMINISTRATOR FOR ADMINISTRATION; AARON WOLOSHIN, DIRECTOR OF ENVIRONMENTAL AFFAIRS; AND THOMAS GHERARDI, DIRECTOR OF CONGRESSIONAL AFFAIRS

Mr. Kunzo. Thank you, Mr. Chairman, I would like to introduce, if I may, the people with me. Mr. Wilbur Sanders, Deputy Commissioner of the Public Buildings Service, on my left. Mr. William Casselman, GSA's newly appointed General Counsel. Behind me is Mr. William A. Butts, Acting Assistant Administrator for Administration; Aaron Woloshin, Director of Environmental Affairs; and Thomas Gherardi, Director of Congressional Affairs.

I appreciate very much the opportunity to appear before the subcommittee today to discuss a problem that has had my full personal attention throughout my 20 years in Government, and especially throughout the 2 years I have been privileged to serve as Administrator of General Services.

At the very beginning of my statement, I want to offer you, Mr. Chairman, and all the members of the subcommittee, my compliments and respectful encouragement. To my knowledge, no congressional subcommittee has ever undertaken a study of redtape and delay of the breadth and depth that you have. Your hearings are already contributing to improvements in the operations and management of GSA and other agencies.

Here in the Congress, you have started the ball rolling. You are entitled to the full cooperation of executives throughout the Government, and you shall most certainly continue to have that cooperation from all of us at GSA.

The principal GSA function within the jurisdiction of the Public Works Committee is, of course, the construction and management of

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public buildings. That function is located organizationally in GSA's Public Buildings Service.

To give you some idea of the range and magnitude of its mission, I should tell you that PBS is presently managing thousands of Federal construction, repair, or improvement projects throughout the 50 States. More than 25,000 employees staff the Public Buildings Service and, at any given time, they are engaged in supervising the work of hundreds of contractors, thousands of subcontractors, and tens of thousands of building tradesmen, maintenance personnel, and others. The overall PBS budget is very close to $700 million this year, and the amount of space assigned by PBS including both federally owned and leased space, is a staggering 220 million square feet of working space and facilities for 820,000 Federal employees.

With these figures as a background--and speaking strictly in a management rather than a partisan, political sense let me tell you that when I first came to GSA, the Public Buildings Service was an amorphous mass of poorly managed, undisciplined, overlapping little autocracies that seemed to run themselves without any particular relationship to each other-or to the Administrator.

To say the least, PBS was hide-bound in molasses slow, uncoordinated, drifting from problem to problem. The absence of good management techniques, combined with a set of anachronistic statutory and regulatory procedures, had simply stultified the place and many of its people. This is a true picture, Mr. Chairman. We found that operation to be rumbling on by itself—and in Government, a group going off and operating by itself never works for very long.

This is an enormous operation all over the country. That is why, Mr. Chairman, I am so grateful for your invitation to discuss what we at GSA are doing about the problem and what you in the Congress can do about it.

Once I had prevailed upon Arthur Sampson, a manager of extraordinary skill and insight, to head PBS as Commissioner, I charged him to begin immediately to remold PBS into a vital, businessoriented organization. Change does not come quickly or easily in an organization like PBS, but we are proud to say that we have done

alter its structure and management during the past 2 years than was done in all its previous 20 years.

Much of the redtape and delay we have discovered in PBS-and I will go into that delay in detail further on in my testimony--was caused by bad management. By and large, management is a problem we can do something about-and have been doing something about-without congressional assistance. However, even if PBS had the management talent and organizational virtue of the most successful private business, we would still need substantial congressional assistance to eliminate some major causes of delay.

I am here today to tell you what we know is wrong with the public building process that we can change on our own and to request the help of the Congress in changing the things we know are wrong, but cannot remedy alone.

First, improving management: The sweeping studies we have conducted with an eye toward making things happen faster at PBS have left no stone unturned. From the apparently simple routine of handling building-related correspondence to the obviously complex

financial planning for the next decade's Federal office space needs-we have probed, discovered, analyzed, and ordered change.

I might add at this point, that I have personally conducted courses on correspondence management, followup action, and work flow. I get very discouraged about people who write letters. Sometimes they seem to be expert in not answering the questions you gentlemen are asking.

There may be times when we honestly admit we write an expert letter not answering the question—but that is the exception. We do have some experts who write all letters that way. For example: A Congressman asked about a particular building and what could be done with it if it was torn down, whether a particular city would be able to tear down the building if they got it, or whether we had reversionary rights.

The letters went back and forth with nine sets of correspondence for over a year, with our people magnificently refraining from answering anything in all nine letters. Finally, the Congressman literally blew his stack, and I do not blame him in the slightest. Nobody had taken the trouble to find out why he was interested. It is very simple. He lived next door to the building. He wanted to know if it was going to be torn down. One second would have answered the question, but it took over a year.

An early step in our revitalization of PBS management was the establishment of the Office of the Executive Director, PBS, a clearinghouse for long-range policy formulation, budgetary planning, and overall management supervision. Another was the creation of an Office of Operational Planning to factor into our management the new and major responsibilities imposed on us by recent statutes and Executive orders dealing with environmental protection, socioeconomic influences of site selections and lease locations, relocation assistance, et cetera.

Mr. Wright. Will you permit a question at this point? We in this committee are, of course, intimately familiar with the provisions of environmental protection laws and relocation assistance laws, and are becoming more familiar with the Executive orders carrying out the mandates. I am not personally as familiar with the requirements concerning socioeconomic influences of site selections. What is encompassed in that?

Mr. KUNZIG. This is a very fortunate question, Mr. Chairman, because we testified on this last week before another committee. So you just hit me at the right time.

Mr. WRIGHT. Off the record. (Discussion off the record.)

Mr. Kunzit. Buildings were placed in the past for many years where the particular agency that was going to use a building wanted it to be, anywhere in the United States. In other words, if it was a local building to be used in San Francisco, that agency could place it where it would be. If it was in Washington, D.C., and it was especially for that agency or the department, they could place it. It was set for the convenience of the department.

It seemed to me and others of us in GSA that other factors today should be taken into consideration, that if Government is spending

millions and millions of dollars for stone structures or marble structures, or whatever they may be, that we could get double duty on our dollars, double value for them, or even more, by taking into consideration urban renewal, jobs, unemployment, and that sort of thing, together with the purpose for which it is being used.

That does not mean that you can put a building somewhere where it is not going to be of any use whatsoever to the department that needs it. But, many times, there can be a compromise in which everybody wins.

A perfect example was recently in Fresno, Calif., which is our big test case. Let me back up and say we went to the President with this, we proposed this, and the President put out Executive Order 11512, which, in effect, says we must take into consideration not just the desires of the agency, but must also give consideration to all these other socioeconomic factors in the placement of buildings, including housing for the people that are going to work in that building. This order is now in effect.

Mr. WRIGHT. Including parking for the employees?

Mr. Kunzig. Parking is one of those things taken in consideration, very definitely; yes, sir. But, we must give consideration to all these items. We are not going to win out 100 percent on all. For example, you may feel that the building is best for the agency. It does have housing appropriate, or maybe it does not have housing, but has excellent bus service from where most of the people would live. Maybe it does not have good parking, maybe it does have good other items, you see. You take the best combination you can get.

In Fresno a particular building, it happened to be for IRS, was going to be in the northern section of Fresno in a largely residential neighborhood near a college, and when we went into the studies in dealing with the city, and dealing with the State and dealing with the counties, and dealing with all the various organizations required under the law, which include HUD, HEW, Commerce, et cetera, of the Federal Government, it became very apparent that it could go in one other part of the city of Fresno and could aid in the development of Fresno in the total redevelopment of parts of the city, and in bringing in this case 5,000 to 6,000 jobs wherever it was situated.

Mr. Wright. I trust that in evaluating these factors, you tried to take into account the wishes of the local units of government and local civic interests?

Mr. Kunzig. We are required to under the Executive order, sir, and we do. We had many meetings with them.

The interesting thing is, when this was settled, the decision has to come down, the decision has to be made, and it is GSA's decision. We make the decision to build in a virtually all Mexican area, SpanishAmerican area of Fresno. The city was delighted. The people were delighted. All the agencies had all come together, including even IRS, which, by this time, had changed and said

they preferred to be down there. It is an example of double duty for dollars. It is working also, and there is one big one in Philadelphia now.

It is interesting, because there we had strong recommendations for a building at 36th and Market Streets, which is right by the University of Pennsylvania, a huge science center, and also right by a large Negro area of the city.

Mr. WRIGHT. Does this add to the time lag in constructing the building?

Mr. Kunzig. To some degree, but we are trying to do it at the same time some of the other items are going on. We do have to have these meetings.

Mr. Wright. Between the time congressional authorization for the building itself comes about and the time you begin getting money for site location, perhaps, or for site acquisition?

Mr. Kunzit. As we go along with this testimony, you will see when we get into the environmental matters which do take time, at least these things will be done during a lot of that time. We would be less than honest if we did not say that with the many new requirements that are coming along these days, unless carefully watched, and unless everyone administering the program does everything possible to avoid delays, the next Federal building may be built in 1999. We are hoping to beat that in some degree. We can, obviously, but we have to watch these serious delays.

We have also brought talented new managers to seven of the eight principal positions in the Public Buildings Service, youthful and dynamic individuals, who pursue better performance with a passion, and welcome change as a partner in their quest. In simple words, we have taken an organization of 25,000, that had no top management when we took it over, and given it a new direction.

I should hasten to point out that our battle to reform PBS has not been a battle against people. It has been a battle against time. For time is money in the construction field as in no other. With escalation of construction costs in recent years averaging about 12 percent per year, the cost of delay is astronomical. This is why we have to come back to you gentlemen all the time for more money.

The American taxpayer can ill afford to see his tax dollar eaten up, dime by dime, as building projects become bogged down in bureaucratic or statutory redtape.

Let there be no doubt about it; the escalation of time-related costs is the single greatest problem of the building industry today.

The near vertical rate of cost increases has pushed the graph lines of the best indices off the charts. Yet, while private industry could attempt to meet the problem head on by adopting new techniques to reduce design and construction time, GSÅ could not.

Statutory, budgetary, and management problems stood in the way. Here is a graphic presentation that makes the point:

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