STATEMENT OF U.S. SENATOR JOHN MCCAIN
PATENT AND TRADEMARK OFFICE RELOCATION
Subcommittee on Transportation and Infrastructure
Senate Environment and Public Works Committee
September 23, 1998

Mr. Chairman, and the distinguished ranking member, thank you for the opportunity to address the Transportation and Infrastructure Subcommittee on the relocation of the U.S. Patent and Trademark Office. I appreciate the generosity of the Senate Environment and Public Works Committee in allowing me to speak on the Patent and Trademark Office's proposed relocation.

The proposed Patent and Trademark Office building complex is shamefully expensive and extravagant. In addition, in putting the proposal together, the Congress limited the Patent and Trademark Office to considering only sites in Northern Virginia, which is certainly not an inexpensive area for construction and leasing of office space.

The PTO consolidation is estimated to cost the taxpayers approximately $1.6 billion. About $1.3 billion of this amount is to pay for a 20-year lease of a new, 2-million square-foot facility somewhere in northern Virginia. The additional $250 million is what the Patent and Trademark Office proposes to spend to "improve" the building, to bring it up to the PTO's standards -- which appears to mean extravagant and luxurious amenities that most of America's businesses do not provide to even their senior executives.

PTO plans to lease a 2-million square-foot building "shell" -which is essentially a structure with walls, ceilings, floors, and windows, but without electrical wiring, computer and telecommunications lines, carpeting, furniture, and all the other necessary interior fixtures. PTO will not have to pay the costs of constructing the building "shell." However, the PTO plans to spend an outrageous amount of taxpayer dollars to bring the building up to its "standards."

PTO is authorized to spend up to $88 million to "build-out" the shell. This includes such necessary items as carpeting, electrical and plumbing fixtures, as well as some necessary environmental control upgrades to support the computer-intensive work of the office. Compared to the government's '"standard" rate for this type of expenditure, "building out" the PTO building will cost 20 percent more than most government buildings.

And on top of that $88 million, the PTO also plans to spend another $29 million for extravagant amenities, including extra elevators, granite and marble decor, jogging and walking trails, sculpture gardens, and outdoor amphitheaters.

That's a total of $117 million to finish the interior of the building with extravagant amenities. On a per-square foot basis, that's $58 per square foot of occupiable space -- or 58 percent over the government's standard.

But that's not all. The PTO also plans to spend another $135 million to move into the building, install telecommunications equipment, and buy furniture. Almost half of this money is for the purchase of new furniture and furnishings, including $250 shower curtains, $1,200 chairs, $1,000 coat racks, and $562 mail room stools.

Altogether, the PTO will pay $252 million to bring the building up to its "standards" -- standards which far exceed the government's norms and which can only be called luxurious by any standard.

After spending $252 million to spruce up the premises, the PTO is then proposing to pay $57 million per year for a 20-year lease -~ over and above the costs of the "improvements" listed above. That is approximately $1.3 billion in lease payments alone over the next 20 years.

The PTO project is expected to cost the taxpayers almost $1.6 billion -- and we won't even own the building at the end of 20 years.

This deal will be worse than the Ronald Reagan building deal. Remember how the cost of the Ronald Reagan building skyrocketed? That building, which is three million square feet, began as a $362 million building, and ended up costing $800 million. That's a huge cost increase.

Ironically, the new PTO building will be smaller than the Reagan building--700,000 square feet smaller. And it is much more expensive. We spent $800 million on the Reagan Building, but at least we own a building that is designed to last 200 years and that includes rentable space to offset its costs.

The original language contained in the Commerce State Justice Appropriations bill did not impose a ceiling on the potential costs of the PTO consolidation. Fortunately, the Senate accepted an amendment which capped the standard build-out cost at the $36.69 per occupiable square foot, limited moving cost to $135,000,000, and capped above standard build-out cost at $29,000,000.

Even with these spending caps, I still have serious concerns regarding the PTO consolidation. The Citizens Against Government Waste, the National Taxpayers Union, the Patent Office Professional Association, and the Alliance for American Innovation also have serious concerns about the enormous cost of this project. In short, just because we can squeeze these extravagancies under the newly imposed spending caps, it does not justify doing so.

This project was destined to become a fiscal nightmare. Our first mistake was that we did not allow ourselves to look at all possible locations to determine the most cost-effective facility to house the new PTO complex. Instead, we only looked at sites in northern Virginia.

I am aware that there are federal regulations that would hold PTO responsible for relocation expenses for employees if the agency moves more than 10 miles. This alone should not restrict us to only consider PTO sites in Northern Virginia. Who knows, the cost benefits of relocating to a non-Northern Virginia site may outweigh the additional cost incurred by the relocation regulations. The problem is, we will never know, because we never looked at sites outside of Northern Virginia.

The sheer excess in the PTO's proposal for the building's amenities is unbelievable -- $250 shower curtains, $1000 coatracks, and miles of walking and jogging paths. Tax dollars should be spent on processing patent applications, not extravagant surroundings. We should not be spending Americans hard-earned tax dollars on extravagant perks. We should be spending tax dollars on processing taxpayers' patent applications. And we should make sure we spend them in the most cost-effective manner possible by looking at all possible locations for government facilities, not just one region.

I am not trying to kill this project. Maybe PTO does need to consolidate. However, I think that we have a responsibility to act to insure that the cost of this project is justified and kept in check. PTO states there are no funds in the foreseeable future to construct federal buildings. If so, and a lease is our only alternative, then we should enter into a sensible lease which does not waste taxpayers' money on unnecessary extravagancies.

I ask my colleagues on the Senate Environment and Public Works Committee to revisit the PTO consolidation without any geographic limitations, and to address the runaway cost, contained in this consolidation plan.