Chapter VII

Facility Planning

Before the space acquisition process can begin, a state agency must obtain authorization. The authorization is granted in two parts. An agency receives its first authorization through the inclusion of its space needs in the Statewide Facility and Capital Plan (FACCAP). The second authorization is obtained when the actual request is submitted to be processed. If the actual request does not reflect what is in FACCAP, the requesting agency must seek emergency certification. The following discussion sets out the process for each authorization phase and its effects on the subsequent space acquisition process.

FACCAP. Published biennially, FACCAP identifies the facility needs of state agencies and how those needs will be met over a five-year period. The Office of Policy and Management (OPM) is responsible for the overall plan preparation. Every year each state agency must determine its space needs based on its program plans and transmits them to OPM. OPM staff reviews the information for consistency with the agency's programs and fiscal resources. It then makes recommendations based on anticipated staffing and program levels at each agency. The recommendations or "pre-authorizations" are integrated into a unified plan. The plan is used as a budgetary guide in processing the actual space request.

Requests for space. After the facility plan has been developed and finalized by OPM, actual requests for space are initially handled by a staff member within DPW's Process Management unit. Once the agency submits its request, the DPW staff person is responsible for reviewing the space request's conformance to FACCAP and checking the state's inventory to determine if there is suitable and available space in state-owned facilities.

If an agency makes a request for space not approved in FACCAP, DPW obtains supporting documentation from the agency, re-evaluates the request for space specifications, and forwards the request to OPM for review and approval through the emergency certification process outlined in statute.

Emergency certification. Any requests for facilities or space not included in the state facility plan must be submitted to OPM. In addition to outlining the justification for its request, the agency must also explain why the request was not previously submitted as part of the facility plan. If the request was previously submitted but not included in the facility plan, the agency must submit sufficient new information to warrant reconsideration. OPM may also require agencies to submit any other information it views as relevant. As part of its review, OPM's Asset Management staff also checks the state-owned facility inventory for suitable and available space. Based on this information, OPM determines whether the request is of an emergency nature or has the potential to seriously hinder the efficient operation of the state.

In addition to items not included in the facility plan, OPM must also be notified of any requests for space exceeding the square footage amount or the cost levels in the approved state facility plan by 10 percent or more. The OPM budget analyst assigned to the agency indicates if money is available and verifies the number of staff that will occupy the space. The request is then sent to the Secretary of OPM for final decision. OPM approval must occur before the space acquisition process may continue.

Between January 1, 1999, and July 20, 2001, OPM received 47 emergency certification requests (ECRs). According to OPM, all but one has been approved. Table VII-1 breaks down the ECRs by agency and reason for request.

In 1999 and 2000, OPM received a total of 18 and 19 ECRs respectively. During the first seven months of 2001, 10 additional ECRs had been submitted for OPM's approval. Committee analysis suggests approximately 30 percent of DPW space requests require emergency certification. As stated earlier, an ECR is submitted for one of two reasons: it is a new request not previously contained the FACCAP or is more than 10 percent over the projected FACCAP need. As the table shows, the number of requests by reason has been somewhat split since 1999.

ECRs processing times. OPM began tracking its internal turnaround times for ECRs in January 2000. OPM's processing times for ECRs received since tracking was initiated averaged 22 days with a range of seven to 52 days.

From its DPW casefile sample, the program review committee was able to calculate ECR processing times to include DPW's handling of the request. The median amount of time from when an agency submitted a request to DPW until OPM gave its final ECR approval was 111 days or almost four months. Assuming OPM's internal processing time of 22 days, DPW's handling of ECRs is approximately three months.

Examination of DPW's responsibilities regarding ECRs suggests duplication of effort. Upon receiving the request, DPW checks conformance with FACCAP and checks the state's inventory of owned property. These steps are then repeated once the request is submitted to OPM for approval. As stated earlier, DPW will ask client agencies to submit new supporting documentation when requests do not conform with FACCAP. The majority of DPW's processing time appears to be spent waiting for additional information from the client agency. This information is then forwarded to OPM. As such, the committee concludes:

• DPW's Process Management unit acts primarily as a medium through which the client agency conveys information to OPM.

The ECR process is essentially a mechanism by which to reconcile any difference between the projected need laid out in FACCAP and actual need. The committee believes OPM should be the sole administrator for this function for three reasons:

1) OPM reviews the agencies' original FACCAP requests and is in a better position in which to request additional supporting information and documentation.

2) OPM has taken primary responsibility for maintaining the state's real estate inventory system. As such, OPM has the most complete and up-to-date information relating to space availability in state-owned properties.

3) Eliminating DPW's role in this phase should reduce processing time for requests.

Therefore, the program review committee recommends:

State agencies deal directly with OPM in requesting space. Once OPM has granted its approval, the request should be forwarded to DPW to continue the space acquisition process.

Determining Agency Space Needs

The committee analysis indicated approximately 30 percent of the space acquisition requests require emergency certification. Changes in program, staffing, and budget levels as well as availability of suitable space appear to be the two main reasons ECRs are sought.

Space standards. It is each agency's responsibility to estimate its space requirements, secure funding for its needs, and notify OPM and DPW of its intent to renew, relocate, or in any way modify its current space status. Space requirements including the amount of space, location, and any required special features are primarily developed by the agencies. In 1991, DPW developed a space standards manual intended to formally establish guidelines to determine the amounts of space needed by state agencies. The manual serves as the state's principal reference for determining the amount of assignable floor area needed for personnel, equipment, and support functions. The guidelines are used by state agencies in forecasting and calculating space necessary to fulfill their missions.

The manual's standards and techniques are based on definitions and space assignment criteria generally accepted by the private and public sectors during the late 80s and early 90s. Interviews with various agency personnel revealed consensus regarding the need to update the standards to conform with current industry guidelines and account for special space requirements for certain agencies. Therefore, the committee recommends:

DPW evaluate the state's space standards guidelines and update the space standards manual by January 1, 2003.

Lease vs. buy/build. The statutes make reference to feasibility studies conducted by DPW for leases over five years. Specifically, DPW's policy manual states lease proposals for a term of more than five years should include a feasibility study determining whether the extended lease term is the state's best alternative. However, discussions with agency personnel and a review of the casefiles suggest limitations to this mandate.

While the statutes authorize the DPW commissioner to order a feasibility study when he or she deems it practicable, both the State Properties Review Board and OPM have requested DPW conduct the studies on occasion. In addition, the studies have been prepared by various parties including the individual leasing agents, the leasing agent supervisor, the client agency, and in at least one instance by the SPRB. Furthermore, feasibility studies are done for a proposal containing a lease term of more than five years but no analysis is done to determine whether an agency should continue to lease when cumulative lease terms total more than five years.

The committee's review of casefiles did note instances where the SPRB raised the question whether continued leasing should be pursued. However, this consideration appears at the end of the acquisition process when much time and effort have already been spent in developing the lease proposal.

In summary, the committee finds:

• Responsibility for evaluating whether leasing was the best way to meet a space need was not clearly defined.
• Currently, there is no formal process to produce a feasibility study for leases.
• Since the lease/buy/build decision point has not been clearly defined, agency proposals for leasing may move forward without formal consideration of alternatives.
• Projections from program review's casefile sample suggest more the 60 percent of the agencies have been in the same leased facility more than five years. Approximately 20 percent have been located in the same space for ten or more years.

The committee believes a formal assessment of alternatives should be made when a state agency has leased the same property for more than 10 years. This assessment should made as part of the planning process and outside of the client agency. State agencies may not have the staff expertise to evaluate alternatives to leasing. Even if agencies realize that leasing is inappropriate, they may continue to lease because it is easier than expending agency effort to develop a plan for relocation.

The state through FACCAP has established a number of goals and implementing policies to be considered whenever space utilization and space management decisions are made. Among the FACCAP's stated goals is the reduction of dependency on leased facilities. To achieve this goal, the state's policy has been to discontinue leases where feasible, limit the use of leased space to interim needs, and replace leases with state-owned facilities as soon as it is economically feasible.

Therefore, the committee believes the decision to lease/buy/build should be incorporated into the state's five year FACCAP plan. As such, the agency best suited to assess this decision is OPM. OPM already makes lease recommendations and grants purchase approvals based upon anticipated budget resources. It is in the best position to determine whether the state should and could pursue lease alternatives. The committee recommends:

OPM analyze FACCAP lease requests to determine if buying or constructing a facility would be an economical alternative to leasing. Whenever necessary, OPM may order a feasibility study be completed by DPW. The findings of OPM's analysis shall be included in FACCAP along with the number of years the specific space need has been met through leasing.

The committee believes OPM would need an additional staff person in their Asset Management unit to conduct this function. This additional person will coordinate the FACCAP requests, ECRs, and actual request for space.

DPW Processing of Request for Space

A key component of the space acquisition planning process is efficient decision-making. Agencies must determine what course of action they wish to pursue and DPW must be prepared to carry it out.

Expiration notices. According to DPW's policy manual and interviews with DPW staff, every month DPW identifies which agency leases will be expiring or contain a lease option to be executed within the next 18 months. Expiration notices are mailed requesting the client agency confirm the continued need for the existing lease or submit a request for new or additional space.

According to DPW staff, client agencies are typically given one month to respond. If an agency does not respond, a follow-up notice is sent. The advance notice gives agencies time to make choices accordingly and presumably facilitates the space acquisition process.

Committee analysis of 34 lease files found:

• only two instances where the 18 month advance notice was actually done;
• in 44 percent of the sample an expiration notice was not found;
• thirty-eight percent or 13 files had expiration notices sent approximately 12 months prior to lease expiration; and
• four cases or (12%) where the notice was sent only 90 days in advance.

Agency response to expiration notice. There is no written policy as to how much time agencies have in which to respond to DPW's expiration notice. Committee analysis found:

• the response time ranged from 30 days (when notified by DPW 90 days in advance) to 9 months (when given 18 months advance notice);
• the median agency response time was six months before the lease expired; and
• none of the files in the case sample had evidence of any follow-up by DPW.

DPW approval of agency request. The request form provides information about the number of personnel to be located in leased space, number of parking spaces needed, and any special requirements an agency might have (e.g. conference rooms, hearing rooms, labs). Once received, the forms are handled by Process Management to verify whether the space requested by the agency has been included in the state's current FACCAP. If it has not been included, the requesting agency must ask OPM to certify there is an emergency need. DPW is also supposed to indicate whether existing state-owned or leased space is available to meet agency's needs. The case sample indicated DPW took a median of 99 days or slightly more than three months to approve the request for space.⁶

Conclusions. The absence of advance expiration notices in the files does not necessarily mean notices were not sent. However, it does raise the issue of a lack of consistent documentation and poor tracking in DPW's Process Management unit. In reviewing the casefiles, the committee noted instances where the client agency claimed to have submitted the request to Process Management multiple times and in at least one occasion where the space request was processed for the wrong location. In addition, delays in request processing were mentioned by other agency staff as one reason leases are forced to enter holdover status⁷. (This issue is further discussed in Chapter VIII.)

Based on its casefile observations and the duplicative nature of the initial phase of the request for space process, the committee recommends:

OPM assume all responsibilities for initially processing request for space including the dispatching of advance expiration notices. OPM shall establish and monitor turn around times for notices.

Once the agencies receive authorization from OPM for their space needs, the request may be submitted to DPW to continue the acquisition process.

⁶ This does not include the processing of ECRs previously discussed.

⁷ A holdover occurs when a lease expires and the occupying agency remains at the location, the tenancy becomes month to month usually at the same terms and conditions.

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