Testimony of David E. Williams,
Research Director, Citizens Against Government Waste
before the Transportation and Infrastructure Subcommittee
of the Senate Environment and Public Worlds Committee
September 23, 1998

Good morning, Mr. Chairman. Thank you for the opportunity to testify today before the Subcommittee on Transportation and Infrastructure. My name is David Williams and I represent the 600.000 members of Citizens Against Government Waste CAGW).

CAGW was created 14 years ago after the late Peter Grace presented to President Ronald Reagan the 2,478 findings and recommendations of the Grace Commission (formally known as the President's Private Sector Survey on Cost Control). These recommendations provided a blueprint t'or a more efficient. effective, less wasteful, and smaller government.

Since 1984, the implementation of Grace Commission and CAGW recommendations have helped save taxpayers more than $596 billion. With a national debt of $5.5 trillion, our work is far from done.

CAGW is very pleased that this hearing is being held. Now more than ever. taxpayers are demanding accountability from their government. Too often in the past. multi-billion dollar construction projects have been undertaken without sufficient oversight and scrutiny, leading to the waste of tens of billions of dollars.

Any time the federal government undertakes a major construction or renovation projects CAGW immediately becomes concerned because past projects show a pattern of excess. These include:

1. The Boston Courthouse - This $218 million monstrosity is the quintessential symbol of excess. When complete. this courthouse will contain a six-story atrium. 63 private bathrooms. 37 libraries and 33 private kitchens. In addition. the courthouse will contain more than $750.000 worth of art work. as well as a $1.5 million dock. Who asked for all these amenities? The judges. Of course. they weren't the ones who had to pay for it. The federal government spent $13 million for the services of world-renowned architect I.M. Pei to create this monument to government waste. Believe it or not. Pei commissioned an $80,000 model of the courthouse made Out of imported African wood.

2. The Foley Square Courthouse in New York cost taxpayers $300 million. or more than $400 per square foot. The General Service Administration's (GSA) Inspector General testified that Foley Square incurred more than $ 120 million in change orders, including adding carpeting valued at $114 per square yard (GSA schedule carpeting is $20 per square yard); doors and hardware which were originally estimated at $1.300 per set but increased to $9.000 per door set because special woods and hardware were used. and a $5.500 bronze fire hose cabinet.

3. The Ronald Reagan International Trade Center. This $800 million 7Etribute" to Ronald Reagan is a classic example of largess and overruns. hardly the appropriate legacy for the former President. This 3-million square foot behemoth contains 42,000 slabs of limestone and enough concrete for a two-lane, 106-mile highway. The building was supposed to be completed by the end of 1993 but only officially opened in July of 1998. Some of the extra costs incurred because of the delay included:

$8.000.000 t'or limestone fabrication

$5.000 000 for excavation

$4,000,000 for a retaining wall

$51,000 for storing the Straus Fountain

The latest example of excess, the proposed relocation of the PTO complex, has become a pitched battle on and off Capitol Hill. A report by Deva and Associates and Jefferson Solutions estimated that relocation would actually save money. A follow-up report by the accounting fimn of Arthur Andersen shows just the opposite.

Deva and Associates' comparison between an unconsolidated scenario and a consolidated one shows a cost savings of $72 million. CAGW doubts the accuracy of this figure because a number of items slated for the new location such as pantries and a child care facility. are assumed to be added to the current space. if they don t move. These little extras add up to $ 17 million. Another reason to question Deva and Associates is because of their gross underestimation of moving costs ($5 million), even though Congress passed a cap of $135 million in such costs.

Deva and Associates estimates total furniture costs of $65 million, including:

300 waste receptacles priced at $100 each

20 waste receptacles with trays priced at $870 each

71 ash urns priced at $309 each

18 shower curtains priced at $250 each.

Shower curtains this expensive are not very easy to find. ABC News had to go to New York and find one imported from Germany at this price.

A September 1998 Arthur Andersen report rebuts a Jefferson Solutions report on per square foot costs. In particular, the Arthur Andersen audit states, "There is an error in the Jefferson Solutions report. The report compares its estimate of the current blended lease rate of $27.89 per occuplable square foot to the proposed lease rate of $25.41 per square foot...Our analysis reveals that the $25.41 figure it (sic.) is on a rentable square foot basis... ' Rentable square footage is always greater space than occupiable. thus bringing down the per square footage cost. According to Arthur Andersen. Thus Jefferson Solutions conclusion that the proposed relocation would result in lower direct lease costs to PTO is incorrect. Based on the data presented in the report. a PTO relocation from its existing space to a consolidated facility would. in fact. result in higher direct lease costs.'' This is a classic apples and oranges comparison game.

In addition, the Department of Commerce's Inspector General is concerned about the construction because of inadequate space planning and the risk of an expensive build~ out.

An analysis of the costs associated with construction of the new PTO office space reveals that total construction and mortgage costs for the 20-vear lease are estimated at $1.6 billion_twice the cost of the Ronald Reagan building. After twenty years, the federal government won't even own the building. What will taxpayers have to show for a $1.6 billion building? Absolutely nothing.

The new PTO complex will occupy 2.4 million square feet. In comparison, the Empire State Building occupies 2.1 million square feet and the Chicago Sears Tower occupies 3.1 million square feet.

PTO construction plans call for extras such as: lighting, cooling, telecommunications, and elevator facilities far above industry standards; lavish granite, hardwood, and marble surfacing materials: plazas, sculptures, and decorative fountains; walking and jogging trails; and an open air amphitheater.

The most popular counter argument advanced by proponents of PTO relocation is that no tax dollars will be used for this construction. Instead of requiring the American taxpayer to shell out the money, large and small inventors will be made to pay more in fees to construct the new complex. Not all inventors are rich and once a patent is approved, inventors can and do pass along the extra costs to the consumer by charging more for their products - a hidden tax. The Omnibus Reconciliation Act of 1990 called for all excess patent fees to go toward deficit reduction. This scenario to build a Taj Mahal for the PTO is typical of the irresistible impulse in Washington to spend rather than save any fiscal surplus.

This construction will also cause a domino effect where other agencies will request new buildings that are above the standard GSA per square-foot allowance.

CAGW recommends that this subcommittee take a step back and completely reevaluate the PTO construction on two fronts:

1. Legislation to privatize PTO has passed the House and awaits action by the Senate. This could change the whole landscape of the agency. Agreeing to the construction of a new expensive building before deciding the future of the PTO puts the cart before the horse.

2. The Arthur Andersen report calls into question the entire basis and rationale for moving to a new location and deserves greater scrutiny.

CAGW recommends that the subcommittee halt plans for construction until the full committee and its House counterpart can thoroughly evaluate the Andersen report. In addition, plans for relocation should be delayed until the subcommittee and full committee determine whether the PTO will be privatized. Since GSA has executed lease agreements that would extend the current lease until 2014. there is sufficient time to make a reasoned decision. which could save taxpayers a great deal of money.

This concludes my testimony. I'll be glad to answer any questions you may have.