Real Property Branch December 2007

2 Real Property - History Key Facts & Figures Main Activities Current Challenges Strategic Priorities Real Property Renewal Next Steps Annexes Outline

3 Real Property – History Public Works Canada founded in instrumental in building national infrastructure: canals, roads, bridges, Parliament, federal buildings PWGSC formed from the merger of Supply and Services and Public Works and others Real Property Branch of PWGSC manages the largest office portfolio in Canada

4 Key Facts & Figures provides office space for almost 241,000* federal employees in 105 departments and agencies in about 1841 locations across Canada is custodian of $7.0 billion worth of federal real property, including most Government of Canada Office Buildings manages 6.8 million square meters of office & common use space including: –3.4 million square meters Crown-owned –2.7 million square meters leased –0.5 million square meters lease-purchased provides services to other departments at a value of $800 million annually administers annual payments in excess of $462 million under the Payments in Lieu of Taxes Program to approximately 1300 local taxing authorities has approximately 3600* employees

5 Custodians of Federal Real Property Correctional Service Canada 4% Royal Canadian Mounted Police 3% Agriculture and Agri-Food Canada 3% Environment Canada 1% Natural Resources Canada 1% Health Canada Fisheries and Oceans Canada 2% All other custodians (includes agencies and Crowns) 23% National Defence 30% Public Works & Government Services 23% Transport Canada 9% 1%

6 Volumetrics - National Capital Area Financial: Project work valued at over $600M Over 14,000 contracts Services funded by other departments est. $153M Operations, Maintenance and Repairs est. $800M Capital works est. $65M Asset: 96 Crown buildings, 200 Leased locations Over 100 buildings serviced for other departments Over 50,000 projects underway

7 Main Activities Accommodation Management –working with other departments to assess and plan their office space requirements (quantity and location). This is a mandatory service - other departments cannot acquire their own office space. Portfolio Management –planning and carrying out the acquisition, management, and disposal of office space, based on client requirements –includes leasing office space from private sector (approx. 40% of total), and managing crown-owned office space (approx. 60% of total) –managing diverse legacy assets (ex. various dams, Esquimalt Graving Dock) Real Estate Advisory Services –providing other departments with architectural, engineering, or other real-property related services such as facilities planning, structural assessments, surplus property disposal etc. These are optional services. Parliamentary Precinct –the Parliament Buildings are part of PWGSC’s portfolio. The maintenance and restoration of these buildings are a high-cost, high-profile activity.

8 Current Challenges Maintaining tenant/client satisfaction with quality of service – cost & timeliness of service delivery are an issue Latest benchmarking of occupancy costs indicate that Government Office are more expensive than the private sector Lack of swing space Aging portfolio has increasing recapitalization requirements Current IT systems do not provide adequate management information for decision-making

9 RPB - Strategic Priorities PWGSC has extensively reviewed its real property operations with a view to meeting these challenges. It has designed a program of Real Property Renewal, which involves two key, related initiatives: 1. Business Transformation – The objective is to reposition Real Property Branch as a modern corporate real estate organization reflecting industry best practices 2. Budget Commitments – Real Property Branch is committed to contributing to the government fiscal framework achieving savings of $1.025B over the next 5 years

Real Property Branch Business Model Development Project Management Facilities Management Property Management Design Space Management Asset Management Workspace Provider Integrated Workplace Management Tactical Strategic “We understand buildings and workspaces and lead agencies through transactions” Current Offering (A Case)Future Offering (B Case) “We understand Government context and process and offer integrated project management, real estate asset management, lease management, space management and maintenance management ” Low value to clientHigh value to client Business Transformation

11 Real Property Transformation Elements 1) Value 2) Strategy 6) Process 7) Information & Technology 5) People 4) Products/Services 3) Policy, Legislation & Regulation Current State Target State Many poor legacy systems Branch of Department Alternative Option Mandatory & high-value services with alternative delivery mechanisms Commercial systems Adhoc, bureaucratic processesIndustry best practice Many focused on delivery on low- value, optional services Realignment of competencies and focus on high-value services Full suite of services In-house provision Transaction driven Driven by consistent principles & vision and a whole of government approach Value-added far below potential Service provider of choice 8) Project & Program Management Competencies, highly risk adverse culture Highly competent, managed risk approach Business Transformation

12 Next Steps - Business Transformation –Governance: Explore option to move delivery of real property services into another type of federal entity, such as SOA or Crown Corporation –Funding: Develop business cases for TBS approval for investment funds –IT Systems: Invest in industry standard real estate systems –Competencies: Target competencies that align to high value activities –Outsourcing: Increase level of outsourcing of low value/transactional functions; in-house staff to focus on high value/strategic functions –Business Transformation RFP - engagement of expert BT resources Business Transformation

13 Budget Commitments

14 Next Steps - Budget Commitments –Continue to implement strategies to achieve savings application of accommodation space and fit-up standards application of better inventory management and aggressive leasing strategies further outsourcing of low value functions reduction of overhead costs through attrition and strategic staffing –Will pursue policy changes at Treasury Board regarding turn key accommodation and capital funding Budget Commitments

15 Annex A: Legislative Mandate Department of Public Works and Government Services Act (sections related to real property) Establishes PWGSC as a common services agency and as an administrator of federal property and immovables (sections 5 and 10) Empowers PWGSC to provide accommodation for Departments and Agencies (section 6) and, to that effect: –to construct / maintain / repair real property –to provide architectural and engineering services –to acquire Real Property materials / services Authorizes PWGSC to provide consulting, management, acquisition/disposal and specialized architectural & engineering services along with any other service required by departments (section 15) Other enabling Acts (related to real property) Federal Real Property and Federal Immovables Act Financial Administration Act Expropriation Act Payments in Lieu of Taxes Act Seized Property Management Act