Overseas Construction:

Problems in Constructing Embassy Facilities in Cairo, Egypt

NSIAD-86-101: Published: Apr 18, 1986. Publicly Released: May 19, 1986.

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In response to a congressional request, GAO examined the Department of State's Foreign Buildings Office (FBO) construction practices for the ambassador's residence and the chancery in Cairo, Egypt, specifically its procedures in contracting for and ensuring quality construction of those structures.

GAO found that FBO did not follow State policies and regulations in building the facilities, resulting in: (1) design problems and changes which caused delays and added costs; (2) contracts with builders without adequate evaluation of their financial and technical capabilities; (3) inadequate staff monitoring of the site project manager's activities; (4) the project manager's inadequate performance in monitoring construction, rejecting below standard materials and workmanship, and reporting problems; and (5) the reprogramming of nearly $1 million to cover cost overruns on the residence construction without notifying the appropriate congressional committees. FBO decided to: (1) abandon construction of the ambassador's residence after spending $3.5 million over a 7-year period because it would have cost $930,000 to repair the poor workmanship and complete the building; (2) sell the property to the Egyptian Government; (3) terminate the original contract for the chancery building because of lack of progress, after spending $16 million of the $27.6 million estimated total cost; and (4) award a new contract for completion of the chancery at an estimated new total cost of $45 million, due partly to new security requirements. FBO has no overall plan or strategy for its space requirements in Cairo and, as a result, it has changed its plans for an ambassador's residence, for acquiring office space, and for the number of floors in the chancery, several times during recent years.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: A new PMC program was initiated at FBO. FBO instituted a new management procedure via outside contractors under its program manager contractor, who will provide personnel, facility, and Egypt to manage and give administrative support to FBO for each capital project. It will be required to follow all draft procedures to build capital projects.

    Recommendation: In view of the construction difficulties experienced in Egypt, and the costly and time-consuming changes made to previous plans there, the Secretary of State should direct FBO to follow departmental procedures for the design and construction of facilities in Egypt.

    Agency Affected: Department of State

  2. Status: Closed - Implemented

    Comments: A decision to build 16 stores, plus a penthouse, was made by FBO for the Cairo Office Building on August 6, 1986.

    Recommendation: In view of the construction difficulties experienced in Egypt, and the costly and time-consuming changes made to previous plans there, the Secretary of State should direct FBO to ensure that necessary attention is directed toward deciding the height of the chancery building.

    Agency Affected: Department of State

  3. Status: Closed - Implemented

    Comments: FBO claims that it made a decision to keep the Zawalike residence and only make minor additions to the present residence.

    Recommendation: In view of the construction difficulties experienced in Egypt, and the costly and time-consuming changes made to previous plans there, the Secretary of State should direct FBO to require that future decisions regarding the ambassador's residence be based on an examination of the costs and benefits of alternatives.

    Agency Affected: Department of State

 

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