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An Interview With: Joe Moravec

Washington, D.C.
An Interview With: Joe Moravec

An Interview With: Joe Moravec

Moravec, 55, who grew up in towns around New York City, served from early 2001 to July, 2005 as head of the federal government’s real estate arm, managing 8,000 owned and leased buildings across the country in 2,000 communities. Previously (as described in more detail below) he had been a top executive of Grubb and Ellis; president of Barnes, Morris, Pardoe & Foster; and in the late 90s served as a sort of in-house venture capitalist for GW. He is a 1973 graduate of Harvard.

Bisnow: How’d you get that big GSA job?
The Bush people approached me in early 2001.

Why did the Bush people approach you?
I was a supporter of the President. I have never been particularly active politically, but I’m a Republican and I’ve supported the President and a number of Republican candidates. I think I came to their attention because of my relationship with Congressman Tom Davis, whom I had supported financially. I think when the Bush people came in they reached out to Tom and asked him to identify some people that might fill some of the jobs. When I think about all the discussion these days about cronyism and whether people are qualified for their jobs or not, I would have to say that I definitely don’t qualify as a crony. I was sought out for my particular professional skill set, and matched very nicely with the job I had.

How’s that?
The Commissioner of Public Buildings runs a very large and diverse property development, management and leasing organization that’s embedded in the federal government. Its mission is essentially to house the civilian federal workforce, over a million workers. As I used to say, our mission is to provide a superior workplace for the federal worker and superior value for the American taxpayer. I approached it very much as if I were running a private real estate services company. And that turned out to be a useful approach.

How big is the federal government’s real estate portfolio?
Over 350 million square feet of office type space. That includes all of the nation’s federal courthouses, most of the federal office buildings, border stations and laboratories from sea to shining sea. Quite a portfolio. Our mission is to design, develop, manage, lease, operate, and dispose of this very active inventory. Of the 350 million, we owned about 180 million square feet, and leased a little less than a 170 million square feet from the private sector.

How many employees?
About 5,500 full time equivalents. Actually that number shrunk during my term from 7,500, and therein lies a tale. The decline in the number of employees has been a continuing trend. During the Carter administration there were about 25,000 FTEs, so there’s been a several decade long trend towards downsizing the federal workforce, very much as in corporate America.

And were all those functions picked up by private entities?
They were. And so the GSA today is not so much an agency of task doers as it is an agency of contract managers. Our budget was about eight billion dollars, which we received through Congress in an ingenious way. Rather than have Congress directly appropriate money to the Public Building Service to provide space, our hundred customer agencies have money appropriated to them each year to pay us rent at market rates. The Department of Commerce, for example, will submit a line item to pay GSA rent which we negotiate with them. That money flows into an internal bank called the Federal Buildings Fund, which we then use to fund all of our different activities. About half of that eight billion dollars is paid out to private sector landlords around the country for leasing space to the federal government. And it is from that source that we draw money to repair, alter, and maintain our inventory of owned buildings, and also provide capital for new construction.

A market system.
Yes. It replicates the working of the private sector and encourages the same kind of rational economic decision making that you see in the marketplace. I think it’s a brilliant piece of public policy, actually introduced in the early ‘70s.

What initiatives did you take during your term to replicate private sector approaches?
Well, let me put it in a larger context. Even though it hasn’t gotten much attention, President Bush is the first MBA president we’ve ever had. Early on in his first administration he established the President’s Management Agenda. Obviously this wasn’t the first administration to try to improve the efficiency and effectiveness of government. But this was something new.

I’m old enough to remember Jimmy Carter’s zero-based budgeting.
Yes. But I honestly think that this administration has made more progress than others, in areas like linking budget to performance, leveraging technology, and outsourcing non-core competencies. These kinds of proven ideas that had been well established in the private sector, had not been conscientiously applied to the running of the federal government. I think it’s created a more efficient, results-oriented government. At GSA I tried to take that philosophy and apply it to the running of our business, which I thought of as an enterprise with customers. I emphasized a customer focus, making sure we weren’t just the rule keepers, but actually dedicated to providing successful service as measured by improving the performance of our customers in support of their various missions. That was the overall guiding principle. In that regard, on the management side of our business, I instituted a portfolio restructuring and reinvestment strategy that looked at our180 million square foot portfolio as a pool of financial assets. We divided them into performing, underperforming, and nonperforming assets, and then developed strategies to deal with each class of asset, which has resulted in a reshaping of the owned portfolio of property. Today it’s a very healthy portfolio of strong positively cash flowing properties that can, to a large extent, pay for their own upkeep.

How about the other side of your business, providing space?
There, our emphasis was on on-time, on-budget delivery of our major capital projects and on launching a national broker contract. We have now engaged the commercial real estate services business, just as GM would, which I think is going to go a long way to improve the quality of the space and the value the taxpayer is getting for their dollars. Internally, the most ambitious thing I undertook was a restructuring of our human capital environment. I looked candidly at our strengths and weaknesses. We decided that we were pretty good at responding to requests from our customer agencies, but we weren’t very good at anticipating them. So we said we wanted to be an agency that looks out preemptively at what our customers’ needs are and works with them to craft an asset management facility strategy that supports their mission. When we started thinking that way, we began to reengineer our business practices. And that resulted in new organizational structure, new job classifications, new job families, new career ladders. And starting in the Washington office, where there were 500 people directly under the supervision of the commissioner, we began growing that organically around the country. This was transformational. If I were to describe the biggest difference between private sector management and the public sector, it would be the human resources environment.

You mean the civil service really makes it difficult to hire people, and so on?
Yes. To give them constructive developmental feedback, so that they’re moved when they’re not performing or rewarded when they are performing. I really tried to organize our workforce around a customer service driven mentality. The other thing I want to mention that I hope will be part of my legacy is that I worked very hard on legislative reform. There are a lot of things that government agencies, including GSA, can’t do because of laws that are counterintuitive. For example, when an agency like GSA disposes of excess property that no longer is fulfilling its mission, it can’t retain the proceeds for reinvestment in its other assets. So there’s no incentive for federal managers to dispose of excess property. Though we weren’t able to get a legislative solution, the President eventually signed an executive order which has the potential to revolutionize the way real property asset management is done in the government. For the first time in the 200 year history of the federal government owning property, we now have drawn attention to the need for professional asset management. All of the land holding agencies are now required to have a senior officer in charge of real estate and know what they’re doing. They have to submit an annual plan, know what’s in their inventory, set objectives and be measured on an annual basis as to how they’re doing in terms of improving the performance of their real estate. And yes, that’s revolutionary.

Your predecessor Bob Peck, who everyone in Washington knows because he became president of the Board of Trade, was a Clinton appointee at the Public Buildings Service. You were a Bush appointee. So how were your principles and practices different?
Bob did a really outstanding job. Our differences had less to do with politics, big D and big R, than with our style as managers. Bob was very innovative in implementing some radical ideas about how to improve performance. He’s more of a policy guy. I’m more of an operations guy. So the juxtaposition or the sequence of the two of us in office I think was pretty good for the agency. Because he set a number of things in motion. Everything he did that was good, which was a lot, I tried to perpetuate . And then I was able to build on his base with a little more emphasis on the actual processes of government. Essentially our agency is an enabler, a facilitator of government. And our mission quite simply was to support the missions of other federal agencies. Which sounds pretty boring. Logistical behind the scenes kind of stuff. But because our mission spanned all of government, we were involved in everything. We found, and I know Bob found this too because we’ve talked about it, that if you knew what you were talking about, if you stuck to your guns, we very rarely got rolled, frankly, for political reasons. Because we had the expertise, we understood what our mission was. If we made our case well, we were able to prevail in almost every kind of discussion with Congress or with OMB or with the general public. You felt as if you were making progress.

Why did you leave?
Several reasons. One was that I felt that I had accomplished much of what I had hoped to accomplish. I set in motion or was able to check off a number of things that I hoped to do when I started. It was a logical time for me. I also frankly wanted to leave enough time in the remaining term, because the President won’t be running again, for my successor to make some kind of impact. You need two or three years to really get traction. I certainly didn’t leave because I wasn’t having fun on the job. And I know Bob would agree with me, this was a very enjoyable experience I was never in the military and I really enjoyed the opportunity to serve my country. It felt good. And as a real estate guy, it’s the dream job because you get to do things involving real estate, which are completely unique to government. So every day was kind of an adventure.

So how do you occupy yourself now?
Well, these days I’m doing a little consulting. I’ve just spent two months on really a fascinating assignment. In October and November I was the coordinator of the American Institute of Architects’ response to the Katrina disaster. I became deeply immersed in all aspects of that tragedy and was able to help get their program on the beam. And so that was a very satisfying assignment. There’s a lot of work that needs to be done down there. Right now, I’m trying to line up a more permanent assignment.

In what area would you like that to be?
In one way or another I’m a real estate guy. So whatever I do it’s going to probably have some real estate component. But what I would really like to do, Mark, is run a nonprofit. I would like to run a foundation or an association or a public interest group that is dealing with big, important issues that are impacting our community or the broader society.

Part of it has to do with the very positive experience I had in government. I’m a general manager, so I like building organizations. I’ve done that in the real estate area. I think that the nonprofit area from what I’ve been able to see could really benefit from that kind of mentality and that kind of skill set. Just as GSA was able to benefit from it. I want to apply what I’ve learned in a new arena. Now, believe me, I’m a red blooded capitalist. There’s certainly nothing wrong with serving shareholders. But I have gotten to a point in my life where I want to serve in a more disinterested way and to deal with the kinds of bigger issues affecting society that nonprofits deal with. Just a personal evolution.

Were you surprised by your positive experience in government?
Yes. In fact, I’d like to say to my private sector brothers and sisters, government isn’t what you think it is. If you look at government from a business perspective, from the outside, it’s frustrating because it looks like it should work like a business. But of course it’s not a business. The job is not to drop a bottom line. The job is to perform a variety of different missions on behalf of the American people. Here in the Washington area are people who depend on doing business with the government, and they’re often frustrated by the incredibly attenuated, statutorily driven processes that government people have to adhere to in doing business. I would ask people to be patient with civil servants who are managing these processes. It’s not because they don’t know what the right thing to do is. It’s just that in very many cases they are constrained by the environment of government, which is not set up to help them get from point A to point B in the fastest possible way with the least use of resources. And I would also encourage private sector people, who have an opportunity, to serve in government. First of all, they need you. They need people who have well-honed private sector discipline in terms of improving the performance of government. And secondly, it feels good to serve your country.

You had baptism by fire.
I had a real baptism by fire when I started. Having lived around Washington for 25 years, I thought I had an understanding of what was going on around here. But when I took this job in government, I walked into the separate and parallel world of official Washington, which exists with very few actual points of intersection, unless you’re a government contractor or a lobbyist,with the metropolitan business community. Six days after I was sworn in in June of ’01, I was sitting by myself behind a microphone up on Capitol Hill defending my eight billion dollar budget. So right away I got immersed in the new world that I had entered. I must say I was very concerned about whether I was going to be able to represent the agency. Well, they took it easy on me. They knew I was a rookie. But I felt that after I had been able to do that, I could do anything. That broke the ice and it gave me the confidence that I could do the job.

Going back, what’s the thumbnail history of your life until GSA?
I grew up in the New York City area, the eldest of five children. I went to private school in New England and graduated from Harvard College in ’73. I then went right to work for a commercial real estate firm, Leggat McCall & Werner, hustling Boston office space. They sent me down to Washington in early ’78 to open the shop here, which was a great experience. I ran that for a few years, and then we sold it to Grubb & Ellis in ’86. After the sale, I was originally the branch manager, and eventually became the number three executive in that company.

Doing what kind of work?
My title was president of the eastern division. I was managing 24 offices between Boston and Chicago and Miami, engaged in providing commercial and industrial real estate services. I left that firm in the early ‘90s and became the president of Barnes, Morris, Pardoe & Foster, which I had a hand in forming. I helped Wes Foster and Bob Cohen merge their two firms, Barnes, Morris & Pardoe, and Long & Foster Commercial. We then acquired the Kaempfer Management Company and created what was in the early ‘90s the largest commercial real estate services company in the Washington area. I ran that for a few years, then left to try to do a Wall Street roll-up venture that didn’t succeed. I became the regional partner for a Charlotte based development and management company called Faison, which we sold to Trammell Crow in 1998. At that point I decided to leave real estate and went to work for The George Washington University for a few years as kind of an in-house venture capitalist. My job was to try to organize non-traditional revenue producing ventures for the university.

Did you do such?
Yes. We developed a very strong corporate training entity partnership with a private company called ESI, which offered project management training under the GW banner. Probably the most interesting project I had there was helping to launch a software development company called Prometheus, that eventually got sold to Blackboard. A very interesting online program for putting pedagogical material on the Web.

Given Bob Peck’s life story, there is of course a well-trodden path from the GSA position you held to the presidency of the Board of Trade. Has your phone rung from the headhunters?
I have registered my interest in that job with Korn Ferry. And I hope to be considered for it. That is a job that plays to my strengths, I think. So we’ll see.