For immediate release
GATINEAU, September 15, 2006 – The Honourable Michael M Fortier, Minister of Public Works and Government Services, today announced the awarding of a contract to assist PWGSC with respect to certain of its real estate assets. This contract results from a June 16, 2006 Request for Proposals, posted on MERX, which invited firms to provide recommendations to PWGSC on 35 of its 325 Crown-owned real estate assets.
“My department manages one of the largest and most diverse real estate portfolios in Canada, providing accommodation to 235,000 federal employees,” explained Minister Fortier. “This government is committed to ensuring it conducts its business in an efficient manner, and this approach makes efficient use of private sector expertise.”
PWGSC faces many challenges in managing its real estate portfolio including recapitalization needs estimated at $4 billion, ensuring the portfolio meets the environmental standards it has adopted and low vacancy rates in certain large urban areas.
The contract was awarded to BMO Capital Markets and RBC Capital Markets Real Estate Group Inc. They will look at a broad range of options to determine the most cost-effective and efficient ways to accommodate federal government departments while generating savings. The recommendations are expected by year end.
This announcement is part of a larger reform PWGSC is undertaking with respect to real property and procurement, in order to improve efficiency and save $3.5 billion over five years.
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For further information, please contact:
Jean-Luc Benoît
Director of Communications
Office of Minister Fortier
819-997-5421
Media Relations
Public Works and Government Services Canada
819-956-2315
Ce texte est également disponible en français.
PWGSC news releases are also available on our Internet site at www.pwgsc.gc.ca/text/generic/media-e.html
BACKGROUNDER
Real Estate Management
The real estate market has become increasingly sophisticated in recent years. A number of public and private organizations in Canada and abroad have studied or implemented innovative approaches to real estate management. These approaches have generated substantial accommodation savings.
Public Works and Government Services Canada (PWGSC) is facing significant challenges with regard to its real estate portfolio. While the department has made no decision with respect to its real estate inventory,
PWGSC is engaging two organizations to recommend real estate strategies that will help it achieve its objectives in ways that offer the best value for Canadians. Those objectives are to:
meet the accommodation requirements of other departments and agencies with respect to the quality, location and quantity of office space. Client demand is currently met by utilizing a combination of Crown-owned, lease-purchase or leased office space in both urban and suburban locations;
generate savings through cost-efficient management of its properties. Past cost saving programs have included outsourcing, space efficiencies, and more aggressive leasing; and,
ensure properties under its stewardship are appropriately maintained given the requirements of an ageing portfolio and compliance with federal government legislation, policies and standards. These include, but are not limited to, the National Building Code, the Financial Administration Act and the Accessibility Standards.
The process of engaging these two organizations was conducted through public tendering. A Request for Proposals (RFP) posted on the government’s electronic tendering system – known as MERX – from June 16, 2006 to July 12, 2006, provided all potential suppliers the information they needed to submit a proposal. The RFP process was clear and transparent, and was designed to yield substantive results efficiently.
The successful organizations are being asked to provide strategies based on a study of 35 assets selected from PWGSC’s inventory (see list below). These properties were selected on the basis that they represent more than one-half of the estimated value of the entire inventory and recapitalization requirements, and are mostly located in areas that carry significant real estate challenges.
It is expected that the organizations will complete their work by the end of this year.
List of Assets
#
Property Name
Address
City
Region
Province
1
Tunney's Pasture Complex
Tunney's Pasture
Ottawa
NCA
Ontario
2
Place du Portage Phase III
11 Laurier Street
Gatineau
NCA
Quebec
3
Place du Portage Phase IV
140 Promenade du Portage
Gatineau
NCA
Quebec
4
Major-General George R. Pearkes Building
101 Colonel By Drive
Ottawa
NCA
Ontario
5
National Printing Bureau
45 Sacré-Coeur Boulevard
Gatineau
NCA
Quebec
6
Place du Portage Phases I & II-
50 Victoria Street
Gatineau
NCA
Quebec
7
Skyline Tower I to VII
1400 Merivale Road
Ottawa
NCA
Ontario
8
Lester B Pearson
125 Sussex Drive
Ottawa
NCA
Ontario
9
Nicholson Building RCMP HQ & Trailers
1200 Vanier Parkway
Ottawa
NCA
Ontario
10
Taxation Data Centre
875 Heron Road
Ottawa
NCA
Ontario
11
Asticou Centre
241 de la Cité-des-Jeunes Boulevard
Gatineau
NCA
Quebec
12
Thomas D'Arcy McGee Building
90 Sparks Street
Ottawa
NCA
Ontario
13
National Library & Public Archives
395 Wellington Street
Ottawa
NCA
Ontario
14
Plouffe Park (includes Dome)
1010 Somerset Street West
Ottawa
NCA
Ontario
15
Sir William Logan Building
580 Booth Street
Ottawa
NCA
Ontario
16
Wellington Building
180 Wellington Street
Ottawa
NCA
Ontario
17
Sir John Carling Building
930 Carling Avenue
Ottawa
NCA
Ontario
18
Sir Charles Tupper Building
2720 Riverside Drive
Ottawa
NCA
Ontario
19
111 Sussex Complex
111 Sussex Drive
Ottawa
NCA
Ontario
20
East Memorial Building
284 Wellington Street
Ottawa
NCA
Ontario
21
Gatineau Preservation Centre
625 du Carrefour Boulevard
Gatineau
NCA
Quebec
22
Government of Canada Building (Shepard & Tunn.)
4900 Yonge Street
Toronto
Ontario
Ontario
23
Government of Canada Building (Tax Data Centre)
1050 Notre Dame Avenue
Greater Sudbury
Ontario
Ontario
24
Government of Canada Building
1 Front Street West
Toronto
Ontario
Ontario
25
Fairmont Complex
657 – 37th Avenue West
Vancouver
Pacific
British Columbia
26
Sinclair Centre
757 Hastings Street West
Vancouver
Pacific
British Columbia
27
Federal Building
715 Peel Street
Montreal
Quebec
Quebec
28
Édifice des douanes
400 Place d’Youville
Montreal
Quebec
Quebec
29
Federal Building
305 René-Lévesque Boulevard West
Montreal
Quebec
Quebec
30
Federal Building
4225 Dorchester Boulevard West
Westmount
Quebec
Quebec
31
NFB Building
3155 Côte-de-Liesse Road
Montreal
Quebec
Quebec
32
Canada Place
9700 Jasper Avenue NW
Edmonton
Western
Alberta
33
Harry Hays Building
220 – 4th Ave SE
Calgary
Western
Alberta
34
Winnipeg Taxation Centre
66 Stapon Road
Winnipeg
Western
Manitoba
35
RCMP K Division Headquarters
11140 – 109th Street NW
Edmonton
Western
Alberta
BACKGROUNDER
Overview of Real Property Challenges
Public Works and Government Services Canada (PWGSC) provides accommodation for approximately 235,000 federal employees in over 100 departments and agencies in approximately 1,800 locations across Canada.
The office inventory totals 6.8 million square metres of space with approximately half of this office space located in the National Capital Area. Of the total inventory, 3.4 million square metres is Crown-owned space, 2.9 million square metres is leased space, and 0.5 million square metres is under lease-purchase agreements.
The strategy being sought will provide responses to the various challenges facing PWGSC’s management of real estate, including:
Condition and age of buildings
The average age of the office space portfolio is approximately 44 years and several key properties have reached their life expectancy. Over the last several years, the government has not made the necessary investments in these assets. As a result, several billion dollars in recapitalization investments will be needed to repair and maintain PWGSC’s inventory of Crown-owned buildings.
Environmental standards
PWGSC has adopted more rigorous environmental standards. All new government office buildings constructed for the Crown must now meet Canada Green Building Council’s Leadership in Energy and Environmental Design (LEED-Canada) Gold level. The department now has four buildings for which a LEED certification rating is being sought. PWGSC also committed to adhere to the Building Owners and Managers Association (BOMA) Canada Go Green Plus program, for Crown-owned office buildings. These standards need to be considered as part of the recapitalization of assets.
Underutilized assets
A number of federal properties are located in strategic locations and could be further developed to optimize their highest and best use. PWGSC will explore options for capitalizing on the unrealized development potential of some properties.
Limited flexibility of assets
A lack of swing space limits PWGSC’s ability to manage properties using a portfolio approach. PWGSC’s overall vacancy rate is less than 2%, reducing the government’s ability to react quickly when departments have immediate space needs. The lack of swing space precludes the temporary relocation of departments when major renovations are required. This problem is particularly acute in the National Capital Area.
There are other urgent challenges that need to be addressed in modernizing real estate management at PWGSC. They include:
Outdated IT systems
Current IT systems do not provide adequate management information to make the best possible decisions for Canadians. There are currently 22 systems to manage projects, assets, leases, space and maintenance services – systems that will need to be replaced to support modern management practices.
Project management performance and risk management
The cost and timeliness of service delivery are key elements in achieving and maintaining tenant/client satisfaction. Better planning and delivery of projects, with greater discipline in the application of our standards and cost-estimating, are needed.
Accommodation operating costs
Recent benchmarking of occupancy costs indicate that PWGSC is on average 20% greater than the private sector.
PWGSC is working to address these challenges. The department has, however, made progress in reducing its costs by:
reducing the average space per employee, more in line with private sector practices;
rigorously applying fit-up standards throughout the government;
taking a more proactive negotiation approach for leases (for instance, starting negotiations earlier and ensuring that we retain the flexibility to renew or move);
improving inventory management; and
reducing administrative costs.
