2/24/26 DGS Senate Budget Hearing

Agency: Pennsylvania Department of General Services (DGS)
Officials Present: Secretary Reggie McNeil and Deputy Secretary Greg Kirk
Total Budget: $274 million total funds, including $180 million General Fund

Link to Video Here --> DGS Senate Budget Hearing

The hearing focused on five major themes:

• Space Optimization and Utilization Program (SUUP)
• Procurement Reform & Emergency Procurement
• Surplus Property & Disposition Planning
• Governor’s Residence Security Incident
• Budget Trends & Fiscal Stewardship

Throughout the hearing, legislators largely adopted a fiscally skeptical posture, pressing DGS on measurable savings, transparency, and accountability. Secretary McNeil emphasized efficiency, modernization, and collaboration across agencies, while frequently deferring broader fiscal allocation decisions to the Budget Office.

1. Space Optimization and Utilization Program (SUUP)

What SUUP Is

SUUP is a multi-year initiative designed to:

• Reduce leased space
• Consolidate state employees into Commonwealth-owned buildings
• Modernize facilities
• Improve IT infrastructure
• Increase density in state-owned buildings

Financial Scope

• FY 2026–27 request: $16.1 million
• Prior year funding: $15.3 million
• Long-term goal: Reduce 2 million square feet of leased space
• Projected long-term savings: ~$180 million
• Savings realized to date: Just over $6.8 million
• Square footage reduced so far: 328,000 sq. ft.

Agency Position

Secretary McNeil framed SUUP as:

• A modernization initiative
• A long-term taxpayer savings strategy
• A way to “give money back to the taxpayers”
• A structural efficiency reform rather than a short-term budget maneuver

He emphasized:

• Leases are not being terminated early; they are being allowed to expire.
• The goal is reducing dependence on private leases by utilizing underused Commonwealth buildings.
• More employees are returning to offices (DGS: ~90% in-office at least 2 days/week).

Legislative Sentiment

Senators pressed aggressively on:

• Total cost vs. savings trajectory
• Why prior-year reserves couldn’t fund SUUP again
• Whether savings should be reinvested into SUUP instead of returning to the General Fund

Senator Dush strongly argued:

• Savings should be directly reinvested into SUUP to accelerate ROI.
• Recycling savings internally could produce exponential long-term benefit.
• Administrative “shuffling” of funds reduces efficiency.

Secretary McNeil agreed reinvestment could be effective but stated:

• Allocation decisions are Budget Office decisions, not DGS alone.
• SUUP savings were intended to benefit broader Commonwealth priorities.

Tone: Constructive but fiscally probing. Legislators want faster savings and tighter reinvestment logic.

2. Procurement Reform

Improvements Reported

• RFP cycle times reduced from ~350+ days to ~270 days.
• Implementation of SAP S/4HANA and Ariba integration.
• Improved vendor and employee user experience.
• AI-driven vendor qualification improvements (referenced broadly).

Agency Framing

DGS characterized this as:

• Modernization
• Efficiency reform
• Incremental but measurable progress

Secretary McNeil acknowledged further reduction goals but admitted regulatory “gates” limit speed.

Legislative Concerns

• What is the target procurement cycle time?
• Are there measurable cost savings?
• Are emergency procurements properly safeguarded?

3. Emergency Procurement Authority

Data Provided

• 200–250 emergency procurements last fiscal year.
• ~150 so far this year.

Examples

• Roof failures
• Infrastructure emergencies
• Most notably: Fire at Governor’s Residence (April 13, 2025)

Safeguards

• Standard procurement code still applies.
• Contract terms and monitoring provisions enforced.
• DGS sets policy; agencies execute under oversight.

Legislative Tone

Concerned about:

• Risk of misuse
• Cost overruns
• Frequency of emergency authority use

Secretary McNeil offered to provide detailed numbers and follow-up documentation.

4. Governor’s Residence Security Incident

A major portion of questioning (particularly by Senator Santarsiero) centered on the April 13, 2025 arson and attempted assassination at the Governor’s Residence.

Facts Established

• Residence became uninhabitable.
• Governor returned to personal residence in Abington.
• DGS coordinated security repairs with State Police.
• Security work remains ongoing.
• No plans to expand property footprint.
• No known prior comparable attack in PA history.

Legislative Framing

Senator Santarsiero:

• Contextualized the incident within rising political violence nationally.
• Positioned it as unprecedented in Pennsylvania.
• Framed security upgrades as necessary given evolving threat climate.

Tone: Serious, security-focused, bipartisan recognition of severity.

5. Surplus Property & Disposition Plan

Key Issue

For a decade, DGS had not regularly provided disposition schedules of surplus properties. Secretary McNeil committed to a formal plan, with:

• Draft completed
• Final plan expected in March
• Collaboration required for approvals

Carrying Costs

DGS estimates:

• ~$20.7 million currently spent on surplus property carrying costs.

Legislative View

Strong push to:

• Accelerate disposition
• Reduce ongoing carrying costs
• Move quickly once disposition plan submitted

Tone: Positive toward DGS responsiveness; strong interest in execution speed.

6. Budget Forecast & Declining Outyear Spending

The Governor’s executive budget projects DGS funding declining through 2030–31.

Secretary McNeil attributed this to:

• SUUP lease savings
• Efficiency gains
• Reduced leasing costs over time

Legislators appeared cautiously supportive but wanted clarity on:

• Where savings land
• How reductions materialize structurally

7. AmeriHealth Caritas Question

Senator Dush raised concerns about:

• AmeriHealth Caritas facility relocation
• High-cost new facility
• Whether Commonwealth contracts are indirectly subsidizing corporate capital expansion
• Whether benefits are flowing to citizens or private equity interests

Secretary McNeil:

• Explained DGS sets procurement policy but does not directly manage operational performance of agency-level contracts.
• Promised follow-up information.

Tone: Early-stage oversight concern; signals potential future inquiry.

Overall Sentiment Summary

DGS Position

• Framed as efficiency-driven, modernization-oriented, fiscally responsible.
• Emphasized collaboration.
• Frequently deferred final fiscal decisions to Budget Office.
• Presented SUUP as long-term structural reform.
• Positioned department as “public servants to the public servants.”

Legislative Posture

• Republican members: Focused heavily on fiscal discipline, reinvestment logic, surplus reduction, and contract oversight.
• Democratic members: Emphasized security, public safety, modernization necessity, and context of political violence.
• Bipartisan interest in:
  • Transparency
  • Measurable outcomes
  • Reducing waste

Key Takeaways

• SUUP is central to DGS’s modernization strategy, but legislators want clearer ROI acceleration.
• There is significant interest in reinvesting SUUP savings internally rather than returning funds to the General Fund.
• Surplus property carrying costs ($20.7M) are a visible vulnerability in budget optics.
• Procurement reform is showing measurable progress but remains slow by private-sector standards.
• The Governor’s Residence attack has materially shifted the security posture and emergency procurement narrative.
• DGS is increasingly operating as a back-office efficiency engine rather than a programmatic agency.