FDA Headquarters Consolidation Does Not Slow Outside Rent Growth

President Obama’s budget requests less headquarters consolidation funding in fiscal 2015. Outside rent spending in the budget request increased from $116.4 million to $120.9 million due to “escalating costs in commercial rent, security, service contracts and utilities,” according to FDA’s congressional justification.

Several thousand FDA employees are expected to begin working at the agency’s White Oak campus later in 2014, although President Obama’s fiscal 2015 budget request reduces the amount devoted to headquarters consolidation.

The FDA campus in Silver Spring, Md., has been under construction for several years and nears completion on a group of four buildings that will house the agency’s Life Sciences-Biodefense Laboratory complex.

FDA expects to occupy the two lab and two office buildings at White Oak before the end of fiscal 2014 on Sept. 30, moving more employees out of rented space in the surrounding area onto the agency’s headquarters campus.

About 3,000 employees are expected to move to the campus in fiscal 2015, which would bring the total working there to about 9,000, according to FDA’s congressional justification of the budget request. The Center for Biologics Evaluation and Research already scheduled its relocation.

Funds devoted to the project, however, were trimmed in the request. After allocating $57.2 million to the project in fiscal 2013 and $61.9 million in fiscal 2014, funds for White Oak consolidation were reduced about $15 million to $47.1 million in the fiscal 2015 request. The administration also increased its request for FDA’s funds devoted to outside office rent (see table below).

The agency’s overall budget was mostly flat in the White House’s request, which could make FDA’s fight on Capitol Hill for funding more difficult. The Department of Health and Human Services said in its Budget-in-Brief that the figures “reflect the current estimates of what is needed” to continue consolidation efforts based on the construction timeline (Also see "FDA 2015 Budget Increase Proposal Leans On Food Safety User Fees" - Pink Sheet, 10 Mar, 2014.).

The Life Sciences-Biodefense Laboratory has been under construction since 2010 and completion is expected in the current fiscal year. The buildings are expected to support annual and pandemic influenza preparedness and blood supply and biological product protection (Also see "FDA FY 2012 Budget Gives Hamburg Regulatory Science Upgrade A Year Late" - Pink Sheet, 21 Feb, 2011.).

An artist's rendering of FDA's White Oak headquarters campus, upon completion, in Silver Spring, Md.

Image courtesy of FDA

In the congressional justification, FDA said it continues to work with the General Services Administration to obtain funds to complete the remainder of the White Oak master plan, as well as update the plan for design and construction of additional necessary facilities. Appropriations have not been approved for two buildings remaining on the master plan, FDA said.

More Leased Space Occupied

FDA said it also intends to occupy new leased office space in Rockville; co-locate two Office of Criminal Investigations field offices into one new leased location; relocate five resident posts; and open a new Office of Regulatory Affairs resident post and sample processing center. Two resident posts also are slated to be vacated, along with a Center for Drug Evaluation and Research lab in St. Louis and four leased headquarters office buildings, according to the congressional justification.

Obama’s budget request earmarks $9 million for facility repair and maintenance, including at the Jefferson Laboratories Complex in Arkansas, the home of the National Center for Toxicological Research and other agency field activities.

In the midst of the campus growth, Obama has undertaken an initiative to save money on federal real estate. Federal agencies were told to freeze the growth of their real estate inventory in 2012 and, earlier in 2014 the administration began tracking government agencies’ adherence to a fixed baseline.

Obama also included funding for an independent real estate board to recommend federal properties that could be sold, consolidated, co-located or reconfigured, according to budget request documents.

Agencies “will continue to pursue mobile workforce strategies and tighter internal controls on space acquisitions,” according to the president’s budget request.

Office Rental Funding Increases

Still, the budget request does not reduce the rent FDA would pay for outside office space.

Rent paid to GSA, which covers the costs of government-owned buildings, was increased $16.2 million over the previous fiscal year to $236.1 million in the fiscal 2015 request. The increase was projected because FDA will occupy the new buildings at White Oak for a full year, rather than a partial year.

“The space is also more expensive than the vacated locations because GSA charges higher rent for newer, more modern facilities,” according to the congressional justification.

But the “Other Rent and Rent-Related Activities” category also increased in the budget request, from $116.4 million in fiscal 2014 to $120.9 million in fiscal 2015. FDA said the increase “will cover escalating costs in commercial rent, security, service contracts and utilities without reducing essential FDA programs,” according to the congressional justification.

The agency was forced to move about 200 CDER Office of Communications workers out of White Oak in 2010 due to space limits. The relocations lasted until construction of CDER offices was finished (Also see "200 CDER Staff Say Goodbye To White Oak, For Now" - Pink Sheet, 6 Dec, 2010.).

CBER Move Could Delay Reviews

CBER announced it will move its staff from offices in Bethesda and Rockville, Md., to White Oak later in 2014. The eight-week process is scheduled to begin May 1 and conclude about July 1, according to a Federal Register notice published March 5.

FDA warned in the notice that the move could force delays in application receipts and/or reviews, but said it would provide updates on its website, if necessary. CBER also will not receive shipments of lot release samples during a two-week period when its Sample Custodian is relocated. The address where samples are mailed also will change during the pause, according to the notice.

The agency advised sponsors to either ship samples before the pause to the existing address or wait until after the pause and send the samples to the new address.

In addition, the Office of Generic Drugs is expected to move to White Oak later in 2014, though the schedule has not been announced. Acting OGD Director Kathleen Uhl said last year that the move would occur between March and August (Also see "FDA Still Racing To Fill GDUFA-Related Openings" - Pink Sheet, 15 Jul, 2013.).

Fiscal 2015 White Oak Consolidation And Rent-Related Budgets*
Program	Fiscal 2013 Actual	Fiscal 2014 Enacted	Fiscal 2015 Request	Fiscal 2014-15 / Change
FDA Consolidation at White Oak	$57.2	$61.9	$47.1	-$14.8 / (-24%)
GSA Rental Payment	$190.2	$219.9	$236.1	$16.2 / (7.4%)
Other Rent and Rent-Related Activities	$88.1	$116.4	$120.9	$4.4 / (3.8%)
* all figures in million; amounts may be inexact due to rounding. Source: FDA fiscal 2015 budget request congressional justification