Government Operations:

Feasibility of Outsourcing the Management and Operation of the Capitol Power Plant

GAO-08-382R: Published: Jan 31, 2008. Publicly Released: Jan 31, 2008.

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The Capitol Power Plant (CPP), managed by the Architect of the Capitol (AOC), provides heating and cooling for the U.S. Capitol and surrounding facilities. This plant, which provides steam and chilled water year-round for about 16 million square feet of space in 24 facilities, consists of 4 main components--the steam plant, the East Refrigeration Plant, the West Refrigeration Plant, and the administration building. In 2003, CPP awarded a construction contract that involved a major effort both to expand the capacity of the plant to meet the growing heating and cooling needs of the U.S. Capitol and to update plant equipment. The centerpiece of this expansion effort is the West Refrigeration Plant Expansion project, a $100.9 million project scheduled for completion in March 2008. For more than a decade, potential overstaffing at CPP has been a principal concern. In 1996, an AOC engineering consultant for CPP asserted that CPP was overstaffed and recommended reducing staff as a way to deliver CPP services more costeffectively. In 2004, in response to a congressional mandate to assess CPP operations and infrastructure, we recommended that AOC update the consultant's 1996 study and examine the advantages and disadvantages of outsourcing CPP operations. More recently, in response to congressional concerns about CPP staffing levels, we reported on AOC's management of CPP and made recommendations on CPP's staffing levels. In 2005, we recommended that AOC develop an implementation plan for adjusting staff levels based on a 2004 study conducted by another AOC engineering consultant that found staffing levels higher at CPP than at comparable plants. Because AOC has made little progress in reducing CPP staffing levels and examining sourcing options, congressional concerns about the overall management of CPP persist. Accordingly, we were directed to examine the feasibility of AOC's entering into a contract with a private entity for the management and operation of the CPP. In response, this report discusses (1) the actions that CPP has taken since 2004 to reduce operating costs and increase efficiencies and (2) the challenges that AOC will need to address before it can make future sourcing decisions about CPP operations.

According to CPP officials, they have taken two actions to reduce costs and increase efficiencies--using more coal and advancing the West Refrigeration Plant Expansion modernization project. Although CPP officials were able to provide some documentation on the degree to which these actions will reduce costs and increase operating efficiencies, they did not have documentation on the full range of benefits and costs associated with these actions or on how these actions will affect CPP's expected staffing structure and staffing levels. AOC faces two formidable challenges that it will need to address before it can make future sourcing decisions about CPP operations. First, AOC will have to address existing staffing concerns that we and others have identified by developing a staffing plan that captures the appropriate staffing structure and staffing levels for CPP. In developing a staffing plan, AOC must assess their staffing needs by (1) developing a complete equipment inventory and a comprehensive workload analysis, (2) determining how the modernization effort will potentially affect future staffing levels, and (3) evaluating the abilities of its staff to operate the modernized plant. Second, even after the existing concerns are addressed, AOC faces the challenge of developing procedures and guidelines for making sourcing decisions. According to a recent study performed by the Commercial Activities Panel, a working group composed of experts in competitive sourcing and headed by the Comptroller General of the United States, sourcing procedures and guidelines should be integrated with an agency's strategic and human capital plans. Although there are no legal restrictions that prohibit AOC from pursuing outsourcing options, AOC will have to consider a number of issues when developing procedures and guidelines that fit with existing agency plans--including identifying activities to outsource, training staff in making sourcing decisions, and addressing legal issues.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: We found that the Architect of the Capitol's (AOC) Capitol Power Plant (CPP) had taken actions since 2004 to reduce costs and enhance operating efficiencies, but had not fully documented the results of its efforts, or quantified the cost savings or efficiencies gained by those actions. We recommended that the AOC quantify for the Congress the cost savings and increased efficiencies generated from completed and ongoing actions taken since 2004. In June 2008 AOC issued a report titled "Report to Promote the Maximum Efficiency for the Operation of the U.S. Capitol Power Plant." This report included details about a number of implemented and planned improvements designed to provide plant cost savings and increased efficiencies. For example, the report details actions taken to provide the optimum staging of all existing chilled water and steam generation equipment. In addition, the report details cost savings generated by CPP's reduction of natural gas consumption and increase in coal consumption. In future years, AOC plans to document CPP cost savings and increased efficiencies as part of its annual energy report, which will help the AOC and Congress oversee CPP operations and hold CPP officials accountable for their actions.

    Recommendation: To determine the most efficient manner to operate CPP, the Architect of the Capitol should quantify for the Congress the cost savings and increased efficiencies generated from completed and ongoing actions taken since 2004.

    Agency Affected: Architect of the Capitol

  2. Status: Closed - Implemented

    Comments: In 2008, we reported that while the Capitol Power Plan (CPP) managed by the Architect of the Capitol (AOC) had taken some actions to reduce costs and enhance operating efficiencies, it had not adequately addressed prior staffing concerns, namely to produce a staffing plan for the Congress and reduce staffing levels in line with our previous recommendations and those of its own consultant. In addition, AOC had not taken the steps necessary to determine whether keeping CPP operations in-house or outsourcing those operations would result in better service delivery. We recommended that AOC complete activities to support future sourcing decisions, including (1) developing a comprehensive staffing plan by completing an equipment inventory and comprehensive workload analysis, determining how the agency's modernization effort will affect future needs, and examining existing staffs' capabilities and (2) establishing procedures and guidelines to guide future sourcing decisions that take into account activities that can be outsourced, staff training in sourcing processes and practices, and legal issues. In 2009, AOC issued a staffing plan for the CPP, based on a comprehensive workload analysis. In 2011, AOC issued a report on the CPP sourcing decision process, which includes a skills inventory of CPP staff, a comprehensive assessment of all CPP functional areas (including equipment), guidelines and approach for sourcing decisions, and an initial competitive sourcing strategy for future sourcing decisions. Developing this formal process for making sourcing decisions will better enable AOC to assess the risks, advantages, and feasibility of outsourcing versus maintaining its operations in-house, and provide CPP with the tools it needs to better inform its future staffing decisions.

    Recommendation: To determine the most efficient manner to operate CPP, the Architect of the Capitol should complete activities to support future sourcing decisions, including (1) developing a comprehensive staffing plan by completing an equipment inventory and comprehensive workload analysis, determining how the modernization effort will affect future needs, and examining existing staffs' capabilities and (2) establishing procedures and guidelines to guide future sourcing decisions that take into account activities that can be outsourced, staff training in sourcing processes and practices, and legal issues.

    Agency Affected: Architect of the Capitol

  3. Status: Closed - Implemented

    Comments: In 2008, we reported that while the Capitol Power Plan (CPP) managed by the Architect of the Capitol (AOC) has taken some actions to reduce costs and enhance operating efficiencies, it has not taken the steps necessary to determine whether keeping CPP operations in-house or outsourcing those operations would result in better service delivery. We recommended that, after establishing procedures and guidelines to guide future sourcing decisions, AOC pursue a competitive sourcing strategy. In May 2011, AOC issued a report--developed by a contractor--on the CPP sourcing decision process, which includes procedures, guidelines, and competitive sourcing strategy for future sourcing decisions, as well as recommendations for outsourcing specific activities at the CPP. As of October 2011, AOC had developed a plan to address those recommendations. Developing this formal process for making sourcing decisions will enable AOC to assess the risks, advantages, and feasibility of outsourcing versus maintaining its operations in-house, and provide CPP with the tools it needs to better inform its future staffing decisions.

    Recommendation: To determine the most efficient manner to operate CPP, the Architect of the Capitol should complete activities to, after completing necessary actions, pursue a competitive sourcing strategy.

    Agency Affected: Architect of the Capitol

 

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