Space Management - Operations Center and Annex

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February 12, 1997


We conducted an audit of the Commission's space management to determine whether the Commission's space at the Operations Center and Annex building could be better utilized, thereby increasing leasing effectiveness or reducing costs. The audit was performed between March and October 1996.

We initially found that the Commission had excess space at the Operations Center and Annex buildings. The Office of Administrative and Personnel Management is taking actions to use space there more efficiently, in connection with a move of headquarters staff to the Operations Center and the termination of warehouse space in Southeast Washington, D.C.

We are recommending, in the short term, several steps to further improve space utilization. In the long term, based on certain contingencies, the Commission may be able to vacate the Annex building, saving approximately $350,000 annually.

Staff in the Offices of the Executive Director and Administrative and Personnel Management commented on a prior draft of this report (see attached). We have modified the report as appropriate to reflect the comments.


Our objective was to evaluate whether the Commission's space at the Operations Center and Annex building could be better utilized, thereby increasing leasing effectiveness or reducing costs. Our analysis was based on conditions as of May 1996, except we adjusted it, where possible, to reflect the acquisition of additional space at the Operations Center in July 1996. We also considered, as appropriate, storage use at headquarters and a leased warehouse facility in Southeast Washington, D.C.

During the audit, we interviewed Commission staff; performed analytical procedures; reviewed building floor plans, leases, and other documentation; and toured the buildings. The audit was performed in accordance with generally accepted government auditing standards between March and October 1996.


In August 1991, the Commission signed a fifteen year lease with two five year options for the Operations Center in Alexandria, Virginia. The lease provided for 81,313 net usable square feet (NUSF) of space, of which 60,587 was classified as office space, 18,574 as data center space, and 2,152 as other (e.g., warehouse) space. In January 1994, the Commission acquired an additional 11,836 NUSF, and in July 1996, another 21,329 NUSF. The cost of the lease for 1996 was $1,815,566. The cost does not include utilities and guard costs.

In August 1993, the Commission signed a fifteen year lease for the Annex building. The lease provided for 18,000 NUSF, of which 3,000 was classified as office space, and 15,000 as other space respectively. The leasing cost for fiscal year 1996 was $219,717. The cost does not include utilities and guard costs of approximately $130,500.


Our audit initially found that the Commission had excess space at the Operations Center and Annex building, for several reasons. These included budget and staffing uncertainties, and the configuration of the Operations Center, which was not designed as a government building.

In July 1996, the Commission acquired additional space in the Operations Center. It moved 99 staff from OAPM, the Comptroller's Office, and the Freedom of Information Act Office into this space and other Operations Center space in November 1996.

As part of that move, OAPM is improving space utilization in the Operations Center (e.g., by reducing the number of staff with private offices, and enhancing the use of conference rooms and the training areas). A total of 17 staff from the Office of Information Technology have moved to a modular layout (formerly, many had private offices of approximately 150 square feet). Plans are underway to extend this effort throughout the Operations Center.

We have several additional short and long term recommendations to further improve the Commission's use of leased space, or reduce leasing costs.

Short Term Issues

Storage Areas

Based on our observations of the Commission's storage areas (including the Operations Center, Annex building, and headquarters), these areas could be used more efficiently, providing additional space. The extra space could be used to offer headquarters staff additional parking, provide space if the Annex building were to be vacated, or reduce Commission use of private storage companies. Our observations follow.

  • In the Annex building, certain filing units could be mechanized or made higher (thereby increasing their capacity without increasing square foot usage), and certain records could be possibly converted to electronic media.
  • Computer paper and forms in several storage areas are stored only one pallet high, and appear to exceed Commission needs.
  • Some storage areas contain a significant quantity of surplus office furniture or documents (policy manuals and forms).
  • Furniture and other items could be better organized.

Recommendation A

The Office of Administrative and Personnel Management should consider corrective actions to provide additional space, based on our observations. These could include: installing mechanized filing units, increasing use of electronic media, storing items higher and in a better organized way, transferring surplus furniture to the General Services Administration, and reducing stocks of computer paper and forms.

Conference and Training Space

We analyzed the use, primarily during June 1996, of four conference rooms and a lounge area in the Operations Center. We found that they were under-used.

Similarly, two large training rooms and smaller break-out rooms were under-used. During the period from December 1995 through approximately the end of May 1996, the training rooms were only used approximately 27% of the available time. A contractor was the main user of these rooms. The break-out rooms were primarily used to store office furniture and training manuals.

One of the four conference rooms has since been converted to an office, and use of the other conference rooms, training rooms, and lounge might increase after the staff move in November. According to OAPM, additional OAPM staff will be assigned office space in the training area as part of the November 1996 move.

Recommendation B

OAPM should consider using some conference rooms and the lounge area for other purposes, if additional space is needed.

Long Term Issues

Annex Building

The Commission spends approximately $350,000 annually to lease the Annex building (18,000 NUSF). This amount consists of lease costs and security guard services.

Depending on the results of the contingencies discussed below, these costs could possibly be avoided, either through sub-letting the Annex building or negotiations with the landlord (who also is the Operations Center landlord). Another advantage of vacating the Annex would be consolidation of staff at the Operations Center.

Based on guidance from the Office of Management and Budget, the Commission is considering whether to close its mainframe facilities at the Operations Center by 1998. The mainframe space could then replace Annex building space. This space occupies a substantial portion (approximately 16,600 NUSF) of the data center.

The Commission has issued a solicitation to replace its current EDGAR contract with BDM, which is expiring. It is considering the extent to which EDGAR should be privatized. BDM now occupies approximately 8,000 square feet at the Operations Center. If the new contractor used its own facilities rather than Commission space, this space would be available to replace Annex space.

Finally, the Commission staff moving to the Operations Center in November could possibly return to headquarters after the headquarters building is renovated. If they return, then the space they occupy at the Operations Center (which the Commission could vacate in October 1999 if it chose to) would be available.

According to the Director of the Commission's Space Renovation Program, additional uses of the space in the Annex Building are now underway. Approximately 1500 square feet of storage space is being converted into an area to house contractors working on Commission projects. Providing on site facilities rather than using contractor space will reduce expenditures on the Entity Filing Fee System (EFFS) program by approximately $138,417 annually.

Recommendation C

OAPM, in consultation with the Offices of Information Technology, the Executive Director, and the General Counsel, should consider whether to vacate the Annex Building (through a sub-lease or negotiations with the landlord), based on the results of the contingencies discussed above.