This Memorandum is designed to improve the Government's management of its office accommodation and property. It replaces Premier's Memorandum 92-7, Government Office Accommodation, dated 19 March 1992.

Cabinet has approved the following revised procedures for the management of Government office accommodation and property, which are aimed at:

(i) Ensuring the Government has in place management procedures reflecting best practice that are in line with Government policy directions;

(ii) Achieving the savings required by Government in order to meet budget targets;

(iii) Establishing principles that will facilitate a whole of government approach to the management of office accommodation (both owned and leased) and property, thereby providing the opportunity to maximise the Government's purchasing power and ensure optimum return on investment; and

(iv) Establishing procedures that will enable improved performance standards across Government for the utilisation of office accommodation and the management and disposal of property.

These procedures apply to all agencies, although the process differs for Government Trading Enterprises and State Owned Corporations. Other non budget sector agencies should consult Treasury regarding the application of these procedures.

The procedures do not apply to operational accommodation such as schools, courthouses and hospitals. Procedures for these are in the Government's Total Asset Management Manual.

These procedures integrate the management of Government Office Accommodation and Property within the Total Asset Management process. This in turn will clearly link the performance of these assets with the service outcomes required of agencies.

In the short term the Government's target is to reduce the average utilisation of office space across the NSW public sector from the existing average of 24 square metres per employee to 18 square metres per employee. This target will be reviewed on a regular basis.

To achieve these objectives and targets the following procedures have been adopted:

• the Government Office Accommodation Leasing Procedures for all agencies (Attachment 1), which aims to ensure changes in accommodation in excess of 500 square metres are properly planned and coordinated;
• the Government Office Accommodation Facility Planning Procedures (Attachment 2), which provides guidelines on how to plan for changes in accommodation in excess of 500 square metres;
• the Procedures for Disposal of Surplus Property (Attachment 3), which facilitate a coordinated approach across government; and
• the Strategic Office Accommodation Plan (Attachment 4), which provides guidelines to assist agencies in ensuring office accommodation is integrated into the Total Asset Management approach.

In addition all agencies are to extend their current asset reporting requirements to include accommodation and to integrate these requirements into a single Total Asset Management Strategy.

Government Trading Enterprises should incorporate a Total Asset Management Strategy in their Statement of Financial Performance and State Owned Corporations should incorporate it in their Statement of Corporate Intent. All other agencies are to provide a Total Asset Management Strategy to the Department of Public Works and Services (DPWS) and Treasury as a part of the budget process.

DPWS will advise the Budget Committee and relevant Ministers on the Government's current and future strategic property and accommodation needs.

To assist agencies in this process the DPWS is developing guidelines to assist in preparing Total Asset Management Strategies and these will be distributed in December 1996. These guidelines are part of the general upgrade of the NSW Government's Total Asset Management Manual and will expand on the guidelines covered in Attachment 4.

DPWS will be responsible for the centralised coordination and management of leasing office accommodation and property disposal. This will not only facilitate a coordinated approach across Government but also reduce the level of duplication and overlap of functions in leasing and property disposal. Accordingly, no agency is to enter into a lease for office space or change lease arrangements without reference to DPWS in accordance with Attachment 1.

The actual process of leasing and property disposal is to be contracted out (as appropriate) by DPWS where exemptions have not been granted on the basis of an agency's in-house skills. Agencies with exemptions are also required to contract out this function.

State Owned Corporations will not be required to give preference to surplus government accommodation but they must consider DPWS' advice regarding such accommodation.

Ministers should ensure that all agencies under their administration become familiar with the procedures covered in this Memorandum. Ministers should also ensure that the Boards of State Owned Corporations under their administration consider and adopt the procedures outlined in this Memorandum (in accordance with Part 3, Section 20O of the State Owned Corporations Act).

Bob Carr
Premier

Issued by: Public Works and Services
Contact Officer: Alan Griffin
Telephone: 02 9372 8812
Date: 12.2.97

Updated May 2004: Supersedes memorandum 92-07

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Attachment 1

GOVERNMENT OFFICE ACCOMMODATION
LEASING PROCEDURES FOR ALL AGENCIES

In planning the acquisition, assignment or renewal of a leasehold interest, the established procedures and guidelines must be followed in order to responsibly manage the Government's office accommodation.

Budget sector agencies should include all office accommodation proposals in their Total Asset Management Strategy and obtain Treasury approval within the annual budgeting process. Budget sector agencies must obtain Treasury approval for any proposals outside the approved budget allocations.

The Department of Public Works and Services (DPWS) is to provide independent strategic advice to Treasury on budget sector agency's proposals. DPWS is to coordinate and approve all office accommodation within approved budget allocations.

Government Trading Enterprises should include any proposed office accommodation changes in excess of 500 square metres in their Statement of Financial Performance and obtain Treasury approval. All proposals must be accompanied by an evaluation report provided by DPWS. The report is to ensure compliance with government policies and strategic accommodation planning requirements.

State Owned Corporations should include proposals for significant office accommodation changes within their Statement of Corporate Intent.

Other non budget agencies should contact the Treasury regarding the application of these procedures.

The following procedures are to apply to all budget and non budget sector Government agencies (including State Owned Corporations).

1. Determine need for the leasehold interest at least 12 months before lease expires (see Attachment 2).

2. Prepare a Facility Plan (see Attachment 2).

3. Budget sector agencies are to obtain approval in principle from Treasury for any office accommodation proposals which have not been previously approved by Treasury in the annual budgeting process.

4. Provide details to DPWS who will then provide advice to Treasury and the relevant Ministers on:

a) Any budget sector agency's proposal to lease office space, or to vary existing lease arrangements, whether by a lease renegotiation or exercising a renewal option. DPWS is to be provided with details prior to any approach to private sector property owners or agents;

b) A non-budget sector agency's review of available options should cover both private sector and NSW Government space, giving preference to government owned or leased vacant space. The advice of DPWS is to be sought before selecting and reviewing the options. State Owned Corporations are not required to give preference to surplus government accommodation, but they must consider DPWS advice regarding such accommodations.

5. Prepare Accommodation Options (see Attachment 2).

6. Budget Sector agencies are to obtain Treasury approval (supported by DPWS evaluation report).

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Attachment 2

GOVERNMENT OFFICE ACCOMMODATION
FACILITY PLANNING PROCEDURES (FOR PROPOSALS TO OCCUPY PREMISES IN EXCESS OF 500 SQUARE METRES)

1. Preparation of Needs Analysis

Through interviews with senior management:

• Review the objectives and future direction of the agency and how well these can be strategically integrated with accommodation;
• Ascertain likely organizational and technological changes (eg. information technology) and the effect these will have on accommodation;
• Formulate space standards appropriate to service delivery needs and liaise with DPWS on Government policy in relation to accommodation standards; and
• Analyse current staff numbers, the inter-relationships and affinities between business groups and review current workplace practices.

2. Preparation of a Facility Plan

• Calculate total area requirements for each business group based on staff numbers and required support spaces (both current and projected), with reference to space standards;
• Evaluate current location and building in relation to how well they support and would continue to support the operations of the agency;
• Evaluate current space usage in relation to efficiency of circulation, planning, etc;
• Carry out preliminary generic planning to establish optimum floor layouts;
• Prepare blocking and stacking diagrams for space allocation; and
• Produce Facility Plan document.

3. Accommodation Options

• Ensure that a complete accommodation strategy is prepared having regard to Government policy on accommodation. The leasing of existing vacant government office accommodation should be a first priority. The strategy should also refer to: relocation, refurbishment, consolidation, co-location or alternative solutions such as information technology.
• Search government and private sector sources for appropriate alternative accommodation if required (see Attachment 1);
• Determine benchmark fitout and relocation costs; and
• Outline accommodation options, evaluate options against area, cost and quality criteria.

4. Provide a copy of facility plan to DPWS and Treasury.

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Attachment 3

GOVERNMENT PROPERTY
PROCEDURES FOR DISPOSAL OF SURPLUS PROPERTY

In planning the disposal of Government property the following procedures are to be adopted and apply to all budget and non budget sector Government agencies:

1. All surplus properties with a highest and best use value in excess of $3 million, including properties involving joint venture arrangements and leasehold disposals are to be referred to the Department of Public Works and Services (DPWS) for the management of their disposal. Agencies are not to dispose of smaller parts of such properties prior to referring the disposal to DPWS. In regard to State Owned Corporations (SOCs), the management of the disposal will be jointly undertaken by a Steering Committee comprising SOCs and DPWS.

2. DPWS is to be advised of all proposed disposals of property with a highest and best value of between $1 million and $3 million to assess its potential strategic value or capability for consolidation with other property.

3. In order to reduce duplication and overlap in property disposal, DWPS is to coordinate and manage the disposal of property where exemptions have not been granted on the basis of an agency's in-house skills. The actual process of property disposal is to be contracted out (as appropriate) by DPWS and by those agencies who have been granted exemptions by DPWS.

4. DPWS is to be consulted at the earliest possible point in the following circumstances:

• Where the properties to be disposed of are in excess of $3 million highest and best value;
• Where the property is capable of consolidation with other government properties;
• Where land exchanges, development agreements or provision of facilities are proposed; and
• Where any accommodation (leased or freehold) becomes vacant and available for disposal.

5. All individuals involved in providing expert advice, including consultants, must declare any conflict of interest. Such conflicts would not necessarily exclude the individual from providing advice, but an agency should be made aware of these conflicts and take action according to Government policy on conflict of interest.

New Property Asset Disposal Guidelines will be prepared in coordination-ordination with the Government's Total Asset Management Manual by DPWS in consultation with relevant agencies by March 1997. Until replacement guidelines are issued the existing Property/Asset Disposal Guidelines dated August 1992 will continue to apply.

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Attachment 4

STRATEGIC OFFICE ACCOMMODATION MANAGEMENT PLAN

All agencies including Government Trading Enterprises, are required to provide a Total Asset Management Strategy to the Department of Public Works and Services (DPWS) and Treasury by April 1997, and then on an annual basis.

The Total Asset Management Strategy should incorporate the existing requirements of: a Capital Investment Strategic Plan; an Asset Maintenance Strategic Plan; and the Property Asset Management Guidelines (currently being updated).

In addition, Total Asset Management Strategies should include a Strategic Office Accommodation Management Plan.

The Total Asset Management Strategy will be linked with the Government's Total Asset Management Manual. Guidelines for the Strategic Office Accommodation Management Plan will be prepared by December 1996 and will include standards for collecting the following data in a cost effective manner.

1. Leasehold Office Accommodation

• Address of site of leasehold interest (land and/or buildings) including net floor area in accordance with the Building Owners Managers Association (BOMA) survey
• Gross and net lease cost expressed in dollars per square metre
• Lease expiry date and any option period
• Date(s) options must be exercised
• Rent review pattern and basis of review (eg. Consumer Price Index, market or other)

2. Freehold Office Accommodation

• Location of each premises
• Gross floor area and net lettable area in accordance with BOMA survey
• Gross site area
• Title information
• Tenancy details
• Rental value including notional value
• Capital costs and recurrent costs
• Market value (including date and valuer's name)

3. Key Performance Indicators

• Space utilisation (square metres per person) determined in accordance with DPWS Guidelines
• Gross annual occupancy cost (dollars per person per year)
• Recurrent annual operating cost incorporating:
• Statutory charges
• Energy costs
• Cleaning
• Building management
• Maintenance, and
• Vacancy rate