Federal Real Property:

DHS and GSA Need to Strengthen the Management of DHS Headquarters Consolidation

GAO-14-648: Published: Sep 19, 2014. Publicly Released: Sep 19, 2014.

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Diana C. Maurer
(202) 512-9627
maurerd@gao.gov

 

David J. Wise
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wised@gao.gov

 

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What GAO Found

The Department of Homeland Security (DHS) and General Services Administration (GSA) planning for the DHS headquarters consolidation does not fully conform with leading capital decision-making practices intended to help agencies effectively plan and procure assets. DHS and GSA officials reported that they have taken some initial actions that may facilitate consolidation planning in a manner consistent with leading practices, such as adopting recent workplace standards at the department level and assessing DHS's leasing portfolio. For example, DHS has an overall goal of reducing the square footage allotted per employee across DHS in accordance with current workplace standards. Officials acknowledged that this could allow more staff to occupy less space than when the campus was initially planned in 2009. DHS and GSA officials also reported analyzing different leasing options that could affect consolidation efforts. However, consolidation plans, which were finalized between 2006 and 2009, have not been updated to reflect these changes. According to DHS and GSA officials, the funding gap between what was requested and what was received from fiscal years 2009 through 2014, was over $1.6 billion. According to these officials, this gap has escalated estimated costs by over $1 billion—from $3.3 billion to the current $4.5 billion—and delayed scheduled completion by over 10 years, from an original completion date of 2015 to the current estimate of 2026. However, DHS and GSA have not conducted a comprehensive assessment of current needs, identified capability gaps, or evaluated and prioritized alternatives to help them adapt consolidation plans to changing conditions and address funding issues as reflected in leading practices. DHS and GSA reported that they have begun to work together to consider changes to their plans, but as of August 2014, they had not announced when new plans will be issued and whether they would fully conform to leading capital decision-making practices to help plan project implementation.

DHS and GSA did not follow relevant GSA guidance and GAO's leading practices when developing the cost and schedule estimates for the St. Elizabeths project, and the estimates are unreliable. For example, GAO found that the 2013 cost estimate—the most recent available—does not include a life-cycle cost analysis of the project, including the cost of operations and maintenance; was not regularly updated to reflect significant program changes, including actual costs; and does not include an independent estimate to help track the budget, as required by GSA guidance. Also, the 2008 and 2013 schedule estimates do not include all activities for the government and its contractors needed to accomplish project objectives. GAO's comparison of the cost and schedule estimates with leading practices identified the same concerns, as well as others. For example, a sensitivity analysis has not been performed to assess the reasonableness of the cost estimate. For the 2008 and 2013 schedule estimates, resources (such as labor and materials) are not accounted for and a risk assessment has not been conducted to predict a level of confidence in the project's completion date. Because DHS and GSA project cost and schedule estimates inform Congress's funding decisions and affect the agencies' abilities to effectively allocate resources, there is a risk that funding decisions and resource allocations could be made based on information that is not reliable or is out of date.

Why GAO Did This Study

DHS and GSA are managing an estimated $4.5 billion construction project at the St. Elizabeths Campus in Washington, D.C. The project, designed to consolidate DHS's executive leadership, operational management, and other personnel at one secure location rather than at multiple locations throughout the Washington, D.C., metropolitan area, has a projected completion date of 2026.

GAO was asked to examine DHS and GSA management of the headquarters consolidation, including the development of the St. Elizabeths campus. This report addresses the extent to which DHS and GSA have (1) developed consolidation plans in accordance with leading capital decision-making practices and (2) estimated the costs and schedules of the St. Elizabeths project in a manner that is consistent with leading practices. GAO assessed various DHS and GSA plans, policies, and cost/schedule estimates, and interviewed DHS and GSA officials.

What GAO Recommends

GAO recommends, among other things, that DHS and GSA develop revised DHS headquarters plans that reflect leading practices for capital decision making and reliable cost and schedule estimates. Congress should consider making future funding for the project contingent upon DHS and GSA developing plans and estimates commensurate with leading practices. DHS and GSA concurred with our recommendations.

For more information, contact David C. Maurer at (202) 512-9627 or maurerd@gao.gov; or David J. Wise at (202) 512- 2834 or wised@gao.gov

Matter for Congressional Consideration

  1. Status: Open

    Comments: In March 2015, the Department of Homeland Security Headquarters Consolidation Accountability Act of 2015 (H.R. 1640) was introduced in the U.S. House of Representatives. The accompanying House Committee Report (H. Rept. 114-166) states that the bill codifies GAO's recommendations that DHS and GSA conform with leading practices as they continue with the DHS headquarters consolidation project. The bill would require DHS, in coordination with GSA, to submit a report to Congress on the DHS headquarters consolidation project that includes an occupancy plan for the St. Elizabeths site and a comprehensive assessment of the real property needed by DHS in the headquarters region, among other things. In addition, the bill would require DHS and GSA to complete an update of the project's cost and schedule estimates that are consistent with GAO's recommendation and conform with relevant federal guidance. As of September 2015, the bill had passed the House and was referred to the U.S. Senate Committee on Homeland Security and Governmental Affairs. A comprehensive report to Congress on DHS headquarters consolidation, along with reliable project cost and schedule estimates, could inform Congress's funding decisions.

    Matter: Congress should consider making future funding for the St. Elizabeths project contingent upon DHS and GSA developing a revised headquarters consolidation plan, for the remainder of the project, that conforms with leading practices and that (1) recognizes changes in workplace standards, (2) identifies which components are to be colocated at St. Elizabeths and in leased and owned space throughout the National Capital Region, and (3) develops and provides reliable cost and schedule estimates.

Recommendations for Executive Action

  1. Status: Open

    Comments: In alignment with GAO's recommendation, on September 16, 2014, DHS issued an Acquisition Decision Memorandum designating the DHS-funded portions of the headquarters consolidation program as a Major Acquisition Program to be overseen by the departmental Acquisition Review Board. However, as of September 2015, DHS has not provided GAO with documentation indicating whether or not the program has been reviewed by the Acquisition Review Board. DHS has also not provided documentation indicating whether or not key acquisitions documents related to the program, such as a mission needs statement or acquisition baseline, have been submitted to departmental management, per DHS policy. Given the magnitude of the project and its impact on future departmental operations, it is important for DHS to apply the same oversight mechanisms to headquarters consolidation as it does with any other DHS-designated major acquisition.

    Recommendation: The Secretary of Homeland Security should designate the headquarters consolidation program a major acquisition, consistent with DHS acquisition policy, and apply DHS acquisition policy requirements.

    Agency Affected: Department of Homeland Security

  2. Status: Open

    Comments: DHS and GSA have taken steps to update the DHS headquarters consolidation plan, but specific assessments that may support a revised plan are not finalized pending review by the Office of Management and Budget (OMB), according to DHS. According to DHS's Fiscal Year 2016 Congressional Budget Justification, DHS and GSA have developed an update to the existing 2013 DHS headquarters consolidation plan that reduces its projected cost and scope. In alignment with GAO's recommendation, the Budget Justification states that the new plan reflects changing conditions, such as a more austere budget climate, and changes to DHS's operational and real estate needs. DHS and GSA officials said that they would provide additional documentation to GAO related to the new plan upon OMB approval. At that time GAO will assess any underlying analyses--such as a comprehensive needs assessment, gap analysis, and alternatives analysis--that may better inform DHS and GSA decisions about future DHS headquarters consolidation efforts. Such analyses are critical given the project's multi-billion dollar cost and impact on future departmental operations.

    Recommendation: In order to improve transparency and allow for more informed decision making by congressional leaders and DHS and GSA decision-makers, before requesting additional funding for the DHS headquarters consolidation project, the Secretary of Homeland Security and the Administrator of the General Services Administration should work jointly to conduct the following assessments and use the results to inform updated DHS headquarters consolidation plans: (1) a comprehensive needs assessment and gap analysis of current and needed capabilities that take into consideration changing conditions, and (2) an alternatives analysis that identifies the costs and benefits of leasing and construction alternatives for the remainder of the project and prioritizes options to account for funding instability.

    Agency Affected: Department of Homeland Security

  3. Status: Open

    Comments: DHS and GSA have taken steps to update the DHS headquarters consolidation plan, but specific assessments that may support a revised plan are not finalized pending review by the Office of Management and Budget (OMB), according to DHS. According to DHS's Fiscal Year 2016 Congressional Budget Justification, DHS and GSA have developed an update to the existing 2013 DHS headquarters consolidation plan that reduces its projected cost and scope. In alignment with GAO's recommendation, the Budget Justification states that the new plan reflects changing conditions, such as a more austere budget climate, and changes to DHS's operational and real estate needs. DHS and GSA officials said that they would provide additional documentation to GAO related to the new plan upon OMB approval. At that time GAO will assess any underlying analyses--such as a comprehensive needs assessment, gap analysis, and alternatives analysis--that may better inform DHS and GSA decisions about future DHS headquarters consolidation efforts. Such analyses are critical given the project's multi-billion dollar cost and impact on future departmental operations.

    Recommendation: In order to improve transparency and allow for more informed decision making by congressional leaders and DHS and GSA decision-makers, before requesting additional funding for the DHS headquarters consolidation project, the Secretary of Homeland Security and the Administrator of the General Services Administration should work jointly to conduct the following assessments and use the results to inform updated DHS headquarters consolidation plans: (1) a comprehensive needs assessment and gap analysis of current and needed capabilities that take into consideration changing conditions, and (2) an alternatives analysis that identifies the costs and benefits of leasing and construction alternatives for the remainder of the project and prioritizes options to account for funding instability.

    Agency Affected: General Services Administration

  4. Status: Open

    Comments: DHS and GSA have taken steps to update the DHS headquarters consolidation plan, but cannot fully develop revised cost and schedule estimates until the plan is approved by the Office of Management and Budget (OMB), according to DHS. GAO will assess any revised cost and schedule estimates for the remainder of the DHS headquarters consolidation project when they are available. Updating the consolidation plan gives DHS and GSA an opportunity to improve the reliability of project cost and schedule estimates. Although the overall consolidation plan is not yet finalized, DHS and GSA should take steps now to ensure that the next iteration of cost and schedule estimates better conforms with leading practices.

    Recommendation: In order to improve transparency and allow for more informed decision making by congressional leaders and DHS and GSA decision-makers, before requesting additional funding for the DHS headquarters consolidation project, after revising the DHS headquarters consolidation plans, the Secretary of Homeland Security and the Administrator of the General Services Administration should work jointly to develop revised cost and schedule estimates for the remaining portions of the consolidation project that conform to GSA guidance and leading practices for cost and schedule estimation, including an independent evaluation of the estimates.

    Agency Affected: Department of Homeland Security

  5. Status: Open

    Comments: DHS and GSA have taken steps to update the DHS headquarters consolidation plan, but cannot fully develop revised cost and schedule estimates until the plan is approved by the Office of Management and Budget (OMB), according to DHS. GAO will assess any revised cost and schedule estimates for the remainder of the DHS headquarters consolidation project when they are available. Updating the consolidation plan gives DHS and GSA an opportunity to improve the reliability of project cost and schedule estimates. Although the overall consolidation plan is not yet finalized, DHS and GSA should take steps now to ensure that the next iteration of cost and schedule estimates better conforms with leading practices.

    Recommendation: In order to improve transparency and allow for more informed decision making by congressional leaders and DHS and GSA decision-makers, before requesting additional funding for the DHS headquarters consolidation project, after revising the DHS headquarters consolidation plans, the Secretary of Homeland Security and the Administrator of the General Services Administration should work jointly to develop revised cost and schedule estimates for the remaining portions of the consolidation project that conform to GSA guidance and leading practices for cost and schedule estimation, including an independent evaluation of the estimates.

    Agency Affected: General Services Administration

 

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