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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

September 2014: 

Federal Real Property: 

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

GAO-14-648: 

GAO Highlights: 

Highlights of GAO-14-648, a report to congressional requesters. 

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 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. 

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. 

View [hyperlink, http://www.gao.gov/products/GAO-14-648]. 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. 

[End of section] 

Contents: 

Letter: 

Background: 

DHS and GSA Consolidation Plans Do Not Fully Conform with Leading 
Capital Decision-Making Practices: 

DHS and GSA Cost and Schedule Estimates for the St. Elizabeths Project 
Do Not Conform with Leading Practices: 

Conclusions: 

Recommendations for Executive Action: 

Matter for Congressional Consideration: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Leading Practices in Capital Decision-Making: 

Appendix III: The Leading Practices for Developing High-Quality Cost 
Estimates: 

Appendix IV: 10 Leading Practices for Developing High-Quality Schedule 
Estimates: 

Appendix V: Summary Assessment of St. Elizabeths 2013 Cost Estimate 
Compared with Leading Practices: 

Appendix VI: Summary Assessment of St. Elizabeths 2008 and 2013 
Schedule Estimates Compared with Leading Practices: 

Appendix VII: Comments from the Department of Homeland Security: 

Appendix VIII: Comments from General Services Administration: 

Appendix IX: GAO Contacts and Staff Acknowledgments: 

Tables: 

Table 1: Summary of Department of Homeland Security (DHS) and General 
Services Administration (GSA) Key Capital Planning Documents: 

Table 2: Planned Construction and Estimated Completion Date for 
Department of Homeland Security (DHS) Headquarters Consolidation at 
St. Elizabeths: 

Table 3: General Services Administration (GSA) Estimates of Department 
of Homeland Security Headquarters Consolidation Cost, Completion Date, 
and Projected Savings, by Calendar Year: 

Table 4: Example of Potential Changes to St. Elizabeths Footprint 
Scenarios if Alternative Workplace Standards Were Applied: 

Table 5: Four Characteristics of a High-Quality, Reliable Cost 
Estimate: 

Table 6: Four Characteristics of a High-Quality, Reliable Schedule 
Estimate: 

Table 7: Summary Assessment of 2013 St. Elizabeths Development Cost 
Estimate Compared with Leading Practices: 

Table 8: Summary Assessment of 2008 St. Elizabeths Development 
Schedule Estimate Compared with Leading Practices: 

Table 9: The Characteristics of a High-Quality Cost Estimate, Mapped 
to the 12 Steps of High-Quality Cost Estimating: 

Table 10: 10 Leading Practices for Developing High-Quality Schedule 
Estimates: 

Table 11: Summary Assessment of St. Elizabeths 2013 Cost Estimate 
Compared with Leading Practices: 

Table 12: Summary Assessment of St. Elizabeths 2008 and 2013 Schedule 
Estimates Compared with Leading Practices: 

Figures: 

Figure 1: St. Elizabeths West Campus: 

Figure 2: Requested and Received Funding for Fiscal Years 2006 through 
2014: 

Figure 3: Schedule Slippage for St. Elizabeths Development: 

Figure 4: United States Coast Guard Headquarters: 

Figure 5: Department of Homeland Security's (DHS) Annual Costs and 
Usable Square Feet by Year of Lease Expiration 2013 through 2023, as 
of February 2014: 

Figure 6: Department of Homeland Security's (DHS) Consideration of the 
Headquarters Consolidation as a Major Acquisition Has Varied: 

Figure 7: St. Elizabeths Development Baseline Updated in 2013: 

Figure 8: Leading Practices in Capital Decision-Making: 

Abbreviations: 

ARRA: American Recovery and Reinvestment Act of 2009: 

CBP: U.S. Customs and Border Protection: 

CPM: critical path method: 

DHS: Department of Homeland Security: 

EAC: estimate at completion: 

FEMA: Federal Emergency Management Agency: 

gPM: Global Project Management Guidance: 

GSA: General Services Administration: 

ICE: U.S. Immigration and Customs Enforcement: 

IGE: independent government estimate: 

IMS: Integrated Master Schedule: 

IRB: Investment Review Board: 

IT: information technology: 

LCCE: life-cycle cost estimate: 

NCR: National Capital Region: 

NPPD: National Protection and Programs Directorate: 

OIG: Office of the Inspector General: 

OMB: Office of Management and Budget: 

PARM: Office of Program Accountability and Risk Management: 

PBS: Public Building Service: 

TIP: Technology Integration Program: 

TSA: Transportation Security Administration: 

USCG: United States Coast Guard: 

WBS: Work Breakdown Structure: 

[End of section] 

United States Government Accountability Office: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

Congressional Requesters: 

September 19, 2014: 

The Department of Homeland Security (DHS) and General Services 
Administration (GSA) are managing a $4.5 billion construction project 
at the federally owned St. Elizabeths Campus in Washington, D.C. 
[Footnote 1] The project, known as the DHS headquarters consolidation 
project at St. Elizabeths, is the centerpiece of DHS's larger effort 
to manage and consolidate its workforce of over 20,000 in the National 
Capital Region (NCR).[Footnote 2] As conceived in 2006, the St. 
Elizabeths site was 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. Specifically, DHS envisioned moving about 
14,000 staff to the new headquarters facility and housing its 
remaining personnel in other consolidated spaces across the region. 
With a current projected completion date of 2026, the St. Elizabeths 
project is intended to provide DHS a secure facility to allow for more 
efficient incident management response and command-and-control 
operations, and also provide long-term cost savings by reducing 
reliance on leased space. 

The DHS headquarters consolidation effort involves multiple management 
issues that we consider high-risk. For example, we have found over the 
years that many federal agencies face long-standing challenges 
involving excess and underutilized property, deteriorating facilities, 
unreliable property data, and facility protection in the post-
September 11 environment. These findings led to our designation, in 
January 2003, of real property management as a high-risk area. 
[Footnote 3] In addition, DHS management issues, including acquisition 
management, have been documented in our high-risk list since 2005. 
[Footnote 4] For example, in September 2012, we reported that DHS's 
acquisition policy reflects many key management practices that could 
help mitigate risks and increase chances for successful outcomes. 
However, most of DHS's major acquisition programs continue to cost 
more than expected, take longer to deploy than planned, or deliver 
less capability than promised.[Footnote 5] 

Given the magnitude of the St. Elizabeths project and the impact of 
headquarters consolidation on DHS operations, you asked us to examine 
DHS and GSA management of the consolidation efforts. Specifically, 
this report addresses the extent to which DHS and GSA have: 

* developed DHS headquarters consolidation plans in accordance with 
leading capital decision-making practices and: 

* estimated the costs and schedules of the DHS headquarters 
consolidation project at St. Elizabeths in a manner that is consistent 
with leading practices. 

The scope of this work included DHS and GSA management of DHS 
headquarters consolidation--principally the St. Elizabeths development 
project--from 2005 through 2014, and DHS and GSA actions to create and 
maintain cost and schedule estimates for the St. Elizabeths project. 
To determine the extent to which DHS and GSA developed DHS 
headquarters consolidation plans in accordance with leading capital 
decision-making practices, we reviewed DHS and GSA documents 
pertaining to how project requirements were determined and evaluated 
DHS and GSA capital planning efforts against applicable leading 
practices in capital decision-making.[Footnote 6] We interviewed DHS 
and GSA officials responsible for the planning and management of the 
DHS headquarters consolidation. Additionally, we reviewed DHS 
documents to determine the extent to which the St. Elizabeths project 
is subject to DHS oversight and agency document requirements for major 
acquisitions, and evaluated the program's compliance with acquisition 
directives. We also interviewed DHS officials responsible for 
overseeing DHS major acquisitions. To determine the extent to which 
DHS and GSA estimated the costs and schedules of the DHS headquarters 
consolidation project at St. Elizabeths in a manner that is consistent 
with leading practices, we evaluated DHS and GSA documents on the 
estimated cost and schedule for the St. Elizabeths project using GAO 
cost-and schedule-estimating leading practices and relevant GSA 
guidance. We also interviewed DHS and GSA officials responsible for 
managing the estimates. Appendix I contains more detailed information 
on our objectives, scope, and methodology. 

We conducted this performance audit from August 2013 to September 2014 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

The Homeland Security Act of 2002 combined 22 federal agencies 
specializing in various missions under DHS.[Footnote 7] Numerous 
departmental offices and seven key operating components are 
headquartered in the NCR.[Footnote 8] When the department was formed, 
the headquarters functions of its various components were not 
physically consolidated, but instead were dispersed across the NCR in 
accordance with their history. For example, in 2007, DHS employees in 
the NCR were located in 85 buildings and 53 locations, accounting for 
approximately 7 million gross square feet of government-owned and -
leased office space. As of July 2014, DHS employees were located in 94 
buildings and 50 locations, accounting for approximately 9 million 
gross square feet of government-owned and -leased office space. 

GSA, the landlord for the civilian federal government, acquires space 
on behalf of the federal government through new construction and 
leasing, and acts as a caretaker for federal properties across the 
country.[Footnote 9] Federal agencies give GSA information on their 
program and mission requirements and GSA then works with those 
agencies to develop and refine their real estate space needs. As such, 
GSA had the responsibility to select the specific site for a new, 
consolidated DHS headquarters facility, based on DHS needs and 
requirements. In addition, GSA is responsible for awarding and 
managing contracts for design and construction. DHS began planning the 
consolidation of its headquarters in 2005. According to DHS, increased 
colocation and consolidation were critical to achieve the following 
objectives: (1) improve mission effectiveness, (2) create a unified 
DHS organization, (3) increase organizational efficiency, (4) size the 
real estate portfolio accurately to fit the mission of DHS, and (5) 
reduce real estate occupancy costs. DHS and GSA developed a number of 
capital planning documents to guide the DHS headquarters consolidation 
process. To start, DHS identified its original housing requirements in 
2006 during the development of the DHS National Capital Region Housing 
Master Plan. In the housing master plan, DHS identified a requirement 
for approximately 7.1 million square feet of total office space in the 
NCR to accommodate DHS headquarters operations, with 4.5 million 
square feet on a secure campus. DHS also developed a program of 
requirements for DHS headquarters components that included a listing 
of current and projected space needs. In June 2007, DHS released its 
Consolidated Headquarters Collocation Plan. The colocation plan 
summarized component functional requirements and the projected number 
of seats needed on-and off-campus for NCR headquarters personnel. 
According to DHS, the colocation plan is based on the idea that the 
consolidated headquarters campus serves as a central hub for 
leadership, operations coordination, policy, and program management in 
support of the department's strategic goals. Table 1 summarizes DHS 
and GSA key planning documents. 

Table 1: Summary of Department of Homeland Security (DHS) and General 
Services Administration (GSA) Key Capital Planning Documents: 

Planning document: DHS National Capital Region (NCR) Housing Master 
Plan; 
Date issued: October 2006; 
Purpose: Identified scenarios covering: 
* DHS program of requirements for DHS headquarters components and all 
component headquarters functions in the NCR, and; 
* each component's level of presence on an unspecified campus and 
during which phase each component would relocate. 

Planning document: DHS Consolidated Headquarters Collocation Plan; 
Date 
issued: June 2007; 
Purpose: Summarized component functional requirements and projected 
number of seats needed on and off an unspecified campus for National 
Capital Region (NCR) headquarters personnel. 
According to the plan: 
* DHS would need 4.5 million gross square feet of office space to 
accommodate about 14,000 staff on campus and the site would 
accommodate: 
- all headquarters U.S. Coast Guard (USCG) and Federal Emergency 
Management Agency (FEMA) components; 
- portions of other components--Transportation Security Administration 
(TSA), U.S. Immigration and Customs Enforcement (ICE), U.S. Customs and 
Border Protection (CBP), National Protection and Program Directorate 
(NPPD), Intelligence, and; 
- the Secretary's Office, the Office of the Assistant Secretary for 
Policy, and the DHS General Counsel, among others; 
* DHS would continue to house staff off-campus (via leased or 
federally owned space) in the NCR, covering about 12,500 staff. 

Planning document: GSA's DHS Headquarters Consolidation Location 
Analysis; 
Date issued: September 2008; 
Purpose: Analyzed options to fulfill space needs based on DHS 
headquarters requirements. GSA identified a list of 15 federally owned 
sites in the NCR and then evaluated the sites against a series of 
evaluation criteria. The evaluation criteria included: 
* compatibility with DHS's security needs and proximity to the White 
House and Congress, as well as major roadways and Metrorail; 
* availability for use by DHS to accommodate DHS's fiscal year 2013 
occupancy timetable and availability of land adjacent to the site to 
accommodate additional square footage plus parking; and; 
* accessibility to neighborhood amenities (within walking 
distance); 
GSA's analysis showed that St. Elizabeths would best meet DHS's 
various requirements. 

Planning document: GSA's Environmental Impact Statement; 
Date issued: November 2008; 
Purpose: Assessed and reported potential impacts from 
the consolidation of DHS headquarters at St. Elizabeths, including; 
* natural resources such as air and water quality, social resources 
such as community services and facilities, and cultural resources such 
as historic sites; and; 
* transportation improvement required to support increased traffic 
volume. 

Planning document: GSA Master Plan; 
Date issued: January 2009; 
Purpose: Guided the redevelopment of the West Campus of St. Elizabeths 
(see figure 1) for DHS. Among other things, the goals of the Master 
Plan included: 
* the provision of facilities that meet the programmatic needs of DHS 
while maintaining the historic character of the West Campus; 
* satisfaction of federal security requirements; 
* preservation of the natural context of the site; 
* * the improvement of transportation access to the campus, and; 
* optimization of the federal investment. 

Source: GAO summary of DHS and GSA documents. GAO-14-648. 

[End of table] 

According to GSA's planning documents, the West Campus of St. 
Elizabeths, held by GSA, was the preferred site for DHS headquarters 
consolidation because (1) it could accommodate the 4.5 million square 
feet of office space, plus parking, and (2) was available immediately--
two key requirements for DHS. GSA developed a Master Plan in 2009 that 
was to guide the overall development at the St. Elizabeths site. The 
plan was vetted through numerous stakeholders and received final 
approval in 2009.[Footnote 10] Construction started at the campus in 
2009. Figure 1 depicts the campus as envisioned in the 2009 Master 
Plan. 

Figure 1: St. Elizabeths West Campus: 

[Refer to PDF for image: illustrated map] 

Specific depictions on the map: 

Center building complex, includes Secretary's office; 
U.S. Coast Guard headquarters. 

Source: General Services Administration. GAO-14-648. 

[End of figure] 

The full development of the St. Elizabeths Campus was intended to 
occur in three phases, with subphases, over 8 years. Table 2 shows the 
original planned construction for each of the project's three phases, 
including the subphases, and their original and current estimated 
completion dates. 

Table 2: Planned Construction and Estimated Completion Date for 
Department of Homeland Security (DHS) Headquarters Consolidation at 
St. Elizabeths: 

Phase: Phase 1a; 
Planned construction: United States Coast Guard (USCG) headquarters, 
site utilities, the Phase 1 central utilities plant, and improvements 
to security perimeter fencing; 
Estimated completion and current status: 2013--USCG headquarters 
completed in 2013. Other planned construction scoped down because of a 
lack of funding. 

Phase: Phase 1b; 
Planned construction: Adaptive reuse of six historic buildings for 
shared use space; St. Elizabeths West Campus is a National Historic 
Landmark District, and some buildings will be renovated for reuse. 
These buildings include the auditorium, cafeteria, and credit union; 
Estimated completion and current status: 2013--Cafeteria and credit 
union completed in 2013. The auditorium and other historical buildings 
were scoped down because of a lack of funding. 

Phase: Phase 2a; 
Planned construction: DHS Secretary's office; DHS headquarters; 
DHS operation centers for critical incident management and response 
activities; 
Estimated completion and current status: 2014--delayed to 2017 because 
of a lack of funding. 

Phase: Phase 2b; 
Planned construction: FEMA headquarters; 
Estimated completion and current status: 2014--delayed to 2021 because 
of a lack of funding. 

Phase: Phase 3; 
Planned construction: Transportation Security Administration (TSA), 
U.S. Customs and Border Protection (CBP), and U.S. Immigration and 
Customs Enforcement (ICE) headquarters; 
Estimated completion and current status: 2016--delayed because of a 
lack of funding. Current estimated completion dates include: TSA-2022; 
CBP-2024; ICE-2025. 

Source: GAO analysis of DHS and GSA data. GAO-14-648. 

Note: Initial estimated completion date based on GSA's Master Plan, 
issued in January 2009. 

[End of table] 

From fiscal years 2006 through 2014, the St. Elizabeths consolidation 
project had received $494.8 million through DHS appropriations and 
$1.1 billion through GSA appropriations, for a total of over $1.5 
billion. As part of this total, the DHS headquarters consolidation 
project received $650 million from the American Recovery and 
Reinvestment Act of 2009 (ARRA).[Footnote 11] In general, GSA funding 
was used for building construction and renovation, and other major 
infrastructure; DHS funding was used for tenant-specific capabilities, 
such as information technology (IT) infrastructure, furniture, and 
secure spaces, among other things. From fiscal year 2009--when 
construction began--through the time of the fiscal year 2014 
appropriation, however, the gap between requested and received funding 
was over $1.6 billion. Figure 2 compares funds requested and received 
for the project for fiscal years 2006 through 2014. 

Figure 2: Requested and Received Funding for Fiscal Years 2006 through 
2014: 

[Refer to PDF for image: 2 vertical bar graphs] 

General Services Administration (GSA): 

Fiscal year: 2006; 
Requested: $38 million; 
Received: $38 million. 

Fiscal year: 2007; 
Requested: $313 million; 
Received: $6.4 million. 

Fiscal year: 2008; 
Requested: $347 million; 
Received: $0. 

Fiscal year: 2009; 
Requested: $347 million; 
Received: $347 million; 
American Recovery and Reinvestment Act of 2009 funding: $450 million. 

Fiscal year: 2010; 
Requested: $0; 
Received: $0. 

Fiscal year: 2011; 
Requested: $380 million; 
Received: $30 million. 

Fiscal year: 2012; 
Requested: $218 million; 
Received: $37.3 million. 

Fiscal year: 2013; 
Requested: $0; 
Received: $0. 

Fiscal year: 2014; 
Requested: $262 million; 
Received: $155 million. 

Department of Homeland Security (DHS): 

Fiscal year: 2006; 
Requested: $0; 
Received: $0. 

Fiscal year: 2007; 
Requested: $50 million; 
Received: $0. 

Fiscal year: 2008; 
Requested: $120 million; 
Received: $0. 

Fiscal year: 2009; 
Requested: $120 million; 
Received: $98 million; 
American Recovery and Reinvestment Act of 2009 funding: $200 million. 

Fiscal year: 2010; 
Requested: $0; 
Received: $0. 

Fiscal year: 2011; 
Requested: $288 million; 
Received: $77 million. 

Fiscal year: 2012; 
Requested: $160 million; 
Received: $56 million. 

Fiscal year: 2013; 
Requested: $89; 
Received: $29. 

Fiscal year: 2014; 
Requested: $93 million; 
Received: $35 million. 

Source: GAO analysis of DHS and GSA data. GAO-14-648. 

[End of figure] 

In 2007, DHS and GSA estimated that the total cost of construction at 
St. Elizabeths was $3.26 billion, with construction to be completed in 
2015, with potential savings of $1 billion attributable to moving from 
leased to owned space. However, according to DHS and GSA officials, 
the lack of consistent funding has affected cost estimates, estimated 
completion dates, and savings. Table 3 shows changes over time to GSA 
cost estimates and scheduled completion dates, as well as projected 
savings associated with moving DHS staff from leased space into 
federally owned space. 

Table 3: General Services Administration (GSA) Estimates of Department 
of Homeland Security Headquarters Consolidation Cost, Completion Date, 
and Projected Savings, by Calendar Year: 

Year: 2007; 
Estimated completion: 2016; 
Estimated cost: $3.26 billion; 
Projected savings resulting from moving employees from leased to owned 
space: $1 billion, then reduced to $743 million. 

Year: 2009; 
Estimated completion: 2016; 
Estimated cost: $3.40 billion; 
Projected savings resulting from moving employees from leased to owned 
space: $632 million. 

Year: 2011; 
Estimated completion: 2021; 
Estimated cost: $3.99 billion; 
Projected savings resulting from moving employees from leased to owned 
space: $516 million. 

Year: 2013; 
Estimated completion: 2026; 
Estimated cost: $4.50 billion; 
Projected savings resulting from moving employees from leased to owned 
space: $532 million. 

Source: GSA Estimates. GAO-14-648. 

[End of table] 

The majority of funding for the St. Elizabeths consolidation project 
through fiscal year 2013 has been allocated to the construction of a 
new consolidated headquarters for the U.S. Coast Guard (USCG) on the 
campus. In 2006, DHS and GSA projected that USCG would move to St. 
Elizabeths in 2011, but the move was delayed because sufficient 
funding for Phase 1 of the project was not available until fiscal year 
2009. In 2009, DHS and GSA updated the projected completion date to 
the summer of 2013. Subsequently, USCG moved to the new building in 
August 2013. Figure 3 shows schedule slippage for the overall project. 

Figure 3: Schedule Slippage for St. Elizabeths Development: 

[Refer to PDF for image: illustrated table] 

Phase 1: 1A: 

U.S. Coast Guard: 
Initial estimated completion: FT 2011; 
Schedule slippage due to funding delays; 
Completion: FY 2013. 

Security fence: 
Initial estimated completion: FY 2011; 
Schedule slippage due to funding delays: 
Partial completion: FY 2013; 
Schedule slippage due to funding delays: 
Revised estimated completion: FY 2019. 

Phase 1: 1B: 

Six historic buildings: 
Initial estimated completion: FY 2011; 
Schedule slippage due to funding delays: 
Partial completion: FY 2013[A]. 

Phase 2: 2A: 

DHS headquarters and Secretary's office: 
Initial estimated completion: FY 2014; 
Schedule slippage due to funding delays: 
Revised estimated completion: FY 2017. 

Phase 2: 2B: 

Federal Emergency Management Agency: 
Initial estimated completion: FY 2014; 
Schedule slippage due to funding delays: 
Revised estimated completion: FY 2021. 

Phase 3: 

Transportation Security Administration: 
Initial estimated completion: FY 2016; 
Schedule slippage due to funding delays: 
Revised estimated completion: FY 2022. 

U.S. Customs and Border Protection: 
Initial estimated completion: FY 2016; 
Schedule slippage due to funding delays: 

Immigration and Customs Enforcement: 
Initial estimated completion: FY 2016; 
Schedule slippage due to funding delays: 
Revised estimated completion: FY 2025. 

Department of Homeland Security (DHS) management: 
Initial estimated completion: FY 2016; 
Schedule slippage due to funding delays: 
Revised estimated completion: FY 2026. 

Source: GAO analysis of DHS and General Services Administration data. 
GAO-14-648. 

[A] The cafeteria and credit union were completed in 2013. Renovation 
of the auditorium and other historic buildings was delayed because of 
a lack of funding. 

[End of figure] 

According to DHS and GSA officials, beginning in calendar year 2009, 
when construction commenced, Phase 1 of the overall project was 
successfully executed on schedule despite funding delays and 
shortfalls during fiscal years 2011 and 2012. GSA officials told us 
that, from fiscal years 2009 through 2013, DHS and GSA had requested 
about $1.6 billion to complete Phase 1 of the project but received 
only about $933 million for this purpose over the period. They said 
that they completed this phase of the project by deferring work 
planned to be completed in Phase 1 so that the USCG building could be 
occupied in 2013. GSA officials said that their efforts to save money 
by deferring work included reducing the scope of work needed to 
complete access road stonework and deferring landscaping and 
construction work on one building and the visitors' center to future 
years. Figure 4 shows the entrance to the new U.S Coast Guard 
Headquarters Building on the St. Elizabeths Campus. 

Figure 4: United States Coast Guard Headquarters: 

[Refer to PDF for image: photograph] 

Source: GAO. GAO-14-658. 

[End of figure] 

Congress, the Office of Management and Budget (OMB), and GAO have all 
identified the need for effective capital decision-making among 
federal agencies. In addition, budgetary pressures and demands to 
improve performance in all areas put pressure on agencies to make 
sound capital acquisition choices. OMB's Capital Programming Guide, a 
supplement to OMB Circular A-11, provides guidance to federal agencies 
in conducting capital decision-making.[Footnote 12] GAO also developed 
its Executive Guide: Leading Practices in Capital Decision-Making, 
which provides detailed guidance to federal agencies on leading 
practices for the four phases of capital programming--planning, 
budgeting, acquiring, and managing capital assets.[Footnote 13] These 
practices are, in part, intended to provide a disciplined approach or 
process to help federal agencies effectively plan and procure assets 
to achieve the maximum return on investment. 

DHS and GSA Consolidation Plans Do Not Fully Conform with Leading 
Capital Decision-Making Practices: 

DHS and GSA's overall plans for headquarters consolidation do not 
fully conform with leading capital decision-making practices related 
to planning.[Footnote 14] DHS and GSA officials reported that they 
have taken some initial actions that could affect consolidation plans, 
such as adopting recent workplace standards at the department level 
and assessing DHS's leasing portfolio. These types of actions may 
facilitate consolidation planning in a manner consistent with leading 
practices. However, the current collection of plans, which DHS and GSA 
finalized between 2006 and 2009, have not been updated to address 
these changes and funding instability that could affect future 
headquarters needs and capabilities. DHS and GSA have not conducted a 
comprehensive assessment of current needs, identified capability gaps, 
or evaluated and prioritized alternatives that would help officials 
adapt consolidation plans to changing conditions and address funding 
issues as reflected in leading practices. In addition, DHS has not 
consistently applied its acquisition guidelines to review and approve 
the project's development. According to DHS and GSA officials, they 
have begun to work together to consider changes to the DHS 
headquarters consolidation plans. However, DHS and GSA have not 
announced when new plans will be issued, and it is unclear if they 
will fully conform with leading capital decision-making practices to 
help plan project implementation. 

In the overall capital decision-making framework, planning is the 
first phase--and arguably the most important--since it drives the 
remaining phases of budget, procurement, and management.[Footnote 15] 
The results from this phase are used throughout the remaining phases 
of the process; therefore, if key practices during this phase are not 
followed, there may be repercussions on agency operations if poor 
capital investment decisions are made. Given that some aspects of the 
project are complete, we compared DHS and GSA headquarters 
consolidation efforts to date with the 5 of 12 capital decision-making 
practices that are most applicable to planning for the remaining 
segments of the consolidation.[Footnote 16] These 5 practices are: 

* conducting comprehensive assessments of needs to achieve results, 

* identifying gaps between current and needed capabilities, 

* evaluating alternatives to best decide how to meet any gaps, 

* prioritizing and selecting projects based on established criteria, 
and: 

* establishing a review and approval framework supported by analysis. 

Appendix II lists these 5 planning practices along with the remaining 
practices that focus on other aspects of the overall capital decision-
making framework not included in the scope of this review, such as 
budgeting, procurement, and management. In addition to the above, one 
important aspect of capital decision-making is recognition of the 
dynamic nature of capital plans and the planning process.[Footnote 17] 

The following compares DHS and GSA planning and oversight for the 
remainder of the DHS headquarters consolidation project with the 
leading capital decision-making practices identified above. 

DHS and GSA Assessment of Needs and Capability Gaps for Headquarters 
Consolidation Have Not Been Updated to Reflect Changing Conditions: 

DHS and GSA capital planning efforts for DHS headquarters 
consolidation have not been updated to reflect changing workplace 
standards and inconsistent project funding. Leading practices in 
capital decision-making call for agencies to assess requirements and 
determine gaps between current and needed capabilities based on the 
results-oriented goals and objectives that flow from the 
organization's mission. A comprehensive assessment of needs considers 
the capability of existing resources and makes use of an accurate and 
up-to-date inventory of capital assets and facilities, as well as 
current information on asset condition. Using this information, an 
organization can make decisions about where and how to invest in 
facilities. During the early stages of planning for the project, DHS 
and GSA developed various reports and planning documents (see table 1) 
to comprehensively assess DHS needs for a consolidated headquarters. 
DHS planning documents identified office space and DHS program 
requirements, and discussed which DHS functions needed to be colocated 
to achieve DHS's mission. However, the plans, which were developed 
prior to the release of GSA's Master Plan in 2009, have not kept pace 
with changes since then in workplace standards and do not account for 
delays attributable to inconsistent funding. 

Workplace standards. Leading organizations we studied developed 
comprehensive needs assessments that usually cover 5 or 6 years into 
the future and are updated frequently--for example, as a part of the 
organizations' budget cycles. A needs assessment is to examine, among 
other things, external factors that affect or influence the 
organizations' operations, such as workplace standards. However, the 
current plans for St. Elizabeths do not reflect changes in the 
workplace, such as telework and smaller standard work areas that could 
reduce the volume of space needed to house DHS employees.[Footnote 18] 
Furthermore, leading practices state that utilizing current and 
accurate information is essential when taking an inventory of current 
capabilities and assessing future needs.[Footnote 19] While DHS and 
GSA's original plans called for a certain size and configuration to 
house employees at St. Elizabeths, changes in workplace standards 
could affect the overall footprint of the St. Elizabeths project or 
increase the number of staff designated to occupy space at the site, 
or both. This could ultimately reduce the number of DHS headquarters 
employees housed in leased space. Recent federal initiatives have been 
introduced to reduce federal agency space. For example, a June 2010 
presidential memorandum directed agencies to explore how innovative 
approaches to space management and alternative work arrangements, such 
as telework, could help reduce the need for real estate and office 
space.[Footnote 20] Another alternative work arrangement, hoteling, 
would allow employees to work at multiple sites and use non-dedicated, 
nonpermanent workspaces assigned for use by reservation on an as-
needed basis. Implementing hoteling could also reduce an agency's need 
for office space. Subsequently, in May 2012, OMB issued a memorandum 
that, among other things, establishes the Freeze the Footprint 
policy.[Footnote 21] This policy directs agencies to restrict growth 
in their civilian real estate inventory. OMB supplemented that policy 
in March 2013 with implementing guidance for Freeze the Footprint that 
required agencies not to increase the total square footage of their 
office and warehouse inventory, using fiscal year 2012 as a baseline. 
OMB's implementing guidance also directs agencies to use various 
strategies to maintain the baseline, including consulting with GSA 
about using technology and space management to consolidate, increasing 
occupancy rates in facilities, and eliminating lease arrangements that 
are not cost-or space effective. 

Inconsistent project funding. In addition to workplace standards, 
current funding for the St. Elizabeths project has not aligned with 
what DHS and GSA initially planned. As discussed earlier, from fiscal 
year 2009--when construction began--through the time of the fiscal 
year 2014 appropriation, the gap between what DHS and GSA requested 
and what was received was over $1.6 billion. According to DHS and GSA 
officials, this funding gap has created cost escalations of over $1 
billion and schedule delays of 10 years, relative to their original 
estimates. DHS and GSA officials cited funding shortfalls as being 
disruptive in sequencing work, such as excavating soil for the DHS 
Operations Center and enabling repairs on the foundation of the St. 
Elizabeths Center Building.[Footnote 22] According to these officials, 
if funding had been available, excavation work associated with the new 
USCG building could have been extended to these other parts of the 
project without interruption. Officials said that if they had funds to 
do the excavation, they could have completed it while the site was 
under construction, instead of having to work around the full 
occupation and operation of the USCG building. DHS and GSA deemed this 
as a lost opportunity to purposely sequence the work to maximize 
construction efficiency and reduce the overall cost of development. 

Funding instability can be a significant factor in advancing a project 
of the magnitude of St. Elizabeths, and maintaining updated 
consolidation plans that are informed by more current assessments of 
DHS and GSA's needs and gaps could help the agencies navigate such 
changing factors as workplace requirements and funding levels. By 
comparing updated DHS and GSA resource needs information with data on 
current asset capabilities--such as the location, condition, and 
performance of DHS facilities in the NCR--DHS and GSA could be better 
positioned to identify any gaps between what is needed to fulfill 
their headquarters consolidation objectives and what resources are 
currently available. As stated earlier, leading practices for capital 
decision-making call for agencies to (1) conduct a comprehensive 
assessment of needs to carry out their missions and (2) identify gaps 
between current and needed capabilities. Furthermore, capital plans 
should be dynamic and updated to reflect decisions about the addition 
of new assets and deletion of old or even in-process acquisitions that 
are not meeting goals.[Footnote 23] According to DHS, the colocation 
plan is a living document and will be updated as necessary to 
accommodate changes in mission, mission focus, emerging threats, 
identified vulnerabilities, new program additions, existing program 
completions, and potential future reorganization initiatives. However, 
as of August 2014, DHS and GSA had not updated their DHS headquarters 
consolidation planning documents, including the 2009 Master Plan and 
colocation plan, to reflect these changes. DHS and GSA had also not 
completed a current assessment of needs and capability gaps related to 
changes in workplace standards and delays attributable to funding 
shortfalls. 

A senior DHS project official stated that the basis of the 
consolidation plan remains the same and that it would be illogical to 
discard the plan mid-stream in favor of some unspecified alternative, 
given the years of comprehensive analysis that underpin the 
development and approval of the original 2009 Master Plan. However, 
DHS and GSA officials reported that they have begun to work together 
to consider changes to DHS headquarters consolidation plans. 
Specifically, in January 2014, DHS and GSA officials stated that they 
are currently reassessing requirements and alternatives for 
consolidation and colocation in recognition that workplace conditions 
have changed since the plan was formulated, beginning in 2006. The 
agencies have not announced when new plans will be issued. 
Furthermore, because final documentation of agency deliberations or 
analyses have not yet been developed, it is unclear if any new plans 
will be informed by an updated comprehensive needs assessment and 
capability gap analysis as called for by leading capital decision-
making practices. Until DHS and GSA update their capital planning 
documents related to DHS headquarters consolidation--showing how DHS 
and GSA asset portfolios for the consolidation efforts meet the goals 
and objectives of the agencies' strategic and annual performance plans 
and how these assets will be used to help agencies achieve their goals 
and objectives--agency managers and Members of Congress will be 
limited in their ability to fully understand how DHS and GSA intend to 
accomplish the consolidation and, consequently make informed decisions 
about future multi-billion dollar investments. Utilizing an updated 
comprehensive needs assessment and gap analysis of current and needed 
capabilities to inform revised headquarters consolidation plans can 
better position DHS and GSA to assure decision makers within both 
agencies and in Congress that consolidation is justified. 

Changing Conditions Call for DHS and GSA to Reevaluate Alternative 
Approaches and Prioritize Projects for Headquarters Consolidation: 

Changes to workplace standards and funding instability provide GSA a 
commensurate opportunity to evaluate and prioritize alternative 
construction and leasing options to meet DHS space needs in the NCR. 
As stated earlier, leading capital decision-making practices call for 
agencies to determine how best to bridge performance gaps by 
identifying and evaluating alternative approaches. Before choosing to 
purchase or construct a capital asset or facility, leading 
organizations are to carefully consider a wide range of alternatives, 
such as using existing assets, leasing, or undertaking new 
construction. After evaluating alternatives, leading practices call 
for organizations to select projects based on a relative ranking of 
investment proposals. This prioritization of projects is important 
because limited resources require organizations to choose alternatives 
with the highest benefit or return. In the years leading up to 2009, 
when GSA issued the project Master Plan, DHS and GSA conducted 
alternatives analyses and used the results of these efforts to support 
the existing DHS headquarters consolidation plan and prioritize the 
individual projects that encompass the larger consolidation effort. 
For example, in 2007, we found that DHS examined various scenarios for 
housing DHS employees, such as a "campus" scenario, which would entail 
consolidation resulting in several campuses, including one large 
campus.[Footnote 24] Likewise, in 2008, GSA analyzed the feasibility 
of consolidating DHS headquarters at a variety of sites throughout the 
NCR, and determined that the only site with space available to 
accommodate DHS needs was the St. Elizabeths campus. After the site 
was selected, DHS and GSA worked together to prioritize the multiple 
construction phases that constitute the overall St. Elizabeths campus 
development. 

Given changes in workplace standards, among other things, as well as 
cost escalation and schedule slippage associated with funding 
instability, DHS and GSA would benefit from updating their 
alternatives evaluation and prioritizing the range of leasing and 
construction alternatives. One potential alternative, for example, 
would be for DHS to consider moving entire components from currently 
leased space to St. Elizabeths, rather than only the leadership of 
particular components as originally envisioned. Moving more staff than 
currently planned to the campus from leased space could potentially 
increase long-term cost savings and facilitate more effective 
collaboration. If DHS and GSA were to take such an action, this would 
require an overall change in their approach to housing staff in 
government-owned and -leased space--a change beyond that already 
considered within the context of DHS's 2007 colocation plan. Even if 
DHS were to consider moving smaller portions of its workforce rather 
than entire components--for example, certain offices within 
components--to St. Elizabeths, DHS would need to consider the 
cascading effect of those changes and develop updated plans to reflect 
that. This would entail a reconsideration of space needs in both owned 
and leased space, and a commensurate reevaluation of funding needs, 
depending on, among other things, the volume and type of available or 
projected owned and leased space, and associated costs and benefits, 
as well as alternative estimates showing when owned or leased space 
might be available. 

DHS and GSA officials acknowledged that new workplace standards could 
create a number of new development options to consider, as the new 
standards would allow for more staff to occupy the current space at 
St. Elizabeths than previously anticipated.[Footnote 25] DHS officials 
told us that when the St. Elizabeths project was conceived, the 
standard office workspace was 200 square feet per person. In response 
to the 2012 Freeze the Footprint initiative described earlier, where 
applicable, DHS intends to reduce the average space per person for its 
employees across the department to 150 square feet of space per 
person. However, this potential change is not reflected in current 
headquarters consolidation plans. As a result, if DHS and GSA choose 
to keep the original 4.5 million square foot footprint they initially 
planned, they could increase the number of staff occupying the 14,000 
seats at St. Elizabeths from 14,000 to about 20,000. Conversely, if 
DHS and GSA decide to keep 14,000 staff they initially planned to work 
at St. Elizabeths, they could shrink the overall footprint to about 
3.7 million square feet. According to DHS and GSA, the agencies have 
taken steps to adapt to the changes in workplace standards. For 
example, flexible workspaces were incorporated into the build-out of 
the Coast Guard headquarters building during construction. 
Specifically, the internal build-out of the space has flexible 
configurations that can be easily and inexpensively changed to support 
changes in the workplace environment, in the event that DHS decided to 
expand or reduce the workforce or space. Table 4 shows the original 
estimates, and the effect of increasing the number of staff occupying 
14,000 seats from 14,000 to 20,000 (scenario A), or reducing the 
footprint to about 3.7 million square feet by keeping the estimated 
number of staff at 14,000 (scenario B). 

Table 4: Example of Potential Changes to St. Elizabeths Footprint 
Scenarios if Alternative Workplace Standards Were Applied: 

Square feet: 
Original estimate: 4.5 million; 
Scenario A: 4.5 million; 
Scenario B: 3.7 million. 

Seats: 
Original estimate: 14,000; 
Scenario A: 14,000; 
Scenario B: 12,000. 

Staff: 
Original estimate: 14,000; 
Scenario A: 20,000; 
Scenario B: 14,000. 

Seat-to-staff ratio[A]; 
Original estimate: 1:1; 
Scenario A: 1: about 1.3; 
Scenario B: 1: about 1.3. 

Source: GAO analysis of Department of Homeland Security and General 
Services Administration data. (GAO-14-648). 

[A] DHS's seat-to-staff ratio of 1: 1.3 is an approximate goal for 
DHS's real property portfolio, but not the actual seat-to-staff ratio 
for scenarios A and B. 

[End of table] 

Adopting either scenario or some variation between the two could have 
a significant impact on the scope and cost of the project and could 
change how DHS and components perform their missions. The following is 
a description of potential alternatives that DHS and GSA could 
consider in light of new workplace standards. DHS and GSA officials 
said they are considering these types of options, although they have 
not yet developed final documents or analysis. For example: 

* Keep the current estimated number of staff (14,000) with a reduced 
square footage (3.7 million). GSA and DHS could, over the short term, 
reduce the overall cost of the project with a decrease in construction 
costs. Furthermore, DHS and the components slated to move to St. 
Elizabeths would likely carry out their mission at the new location as 
originally intended. 

* Maintain the current square footage projection (4.5 million square 
feet) while increasing the number of staff occupying the 14,000 seats 
(from 14,000 to 20,000). This change could result in an increase of 
the overall short-term cost of the project because GSA might have to 
build out additional office space and meet requirements for additional 
services, such as computer and telecommunication lines and 
technological services. However, the increased staff at St. Elizabeths 
could also increase long-term savings because DHS would not need to 
lease space for an increased number of employees should DHS decide to 
move more to St. Elizabeths. 

In addition, as discussed earlier, from fiscal years 2009 to 2014, the 
gap between requested funding and funding received was over $1.6 
billion. According to DHS and GSA officials, this funding gap has 
created cost escalations of over $1 billion. To help address the 
variation in funding requested and received, DHS and GSA have revised 
their funding strategy to focus on developing smaller construction 
segments that are intended to be more financially viable and less 
subject to uncertainty. For example, DHS and GSA may request full 
funding for a construction segment that will result in a functional, 
usable building and not be dependent on additional future funding to 
complete. This funding strategy is consistent with a leading practice 
related to the budgeting phase of capital decision-making, which calls 
for agencies to budget for projects in useful segments.[Footnote 26] 
Specifically, DHS and GSA would allocate funding for the remaining 
work at St. Elizabeths into usable segments that are independent of 
the overall consolidation, rather than incrementally over the length 
of the project, as has been done in the past. Developing a funding 
strategy into segments may be a viable approach in managing and 
overseeing a project with a scope and potential cost as large as St. 
Elizabeths, particularly in a constrained budgetary environment. 

Schedule delays--up to 10 years relative to original estimates, 
according to DHS officials--have also resulted from the gap between 
funding requested and funding received. These delays have posed 
challenges for DHS in terms of its current leasing portfolio. 
Specifically, DHS's long-term leasing portfolio was developed based on 
the original expected completion date for St. Elizabeths development 
in 2016. However, according to DHS leasing data, 52 percent of DHS's 
current NCR leases will expire in 2014 and 2015, accounting for almost 
39 percent of its usable square feet. See figure 5 for DHS's annual 
leasing costs and usable square feet by year of lease expiration for 
2013 through 2023. 

Figure 5: Department of Homeland Security's (DHS) Annual Costs and 
Usable Square Feet by Year of Lease Expiration 2013 through 2023, as 
of February 2014: 

[Refer to PDF for image: vertical bar graph] 

Fiscal year: 2013; 
Annual rent of leases: $6.8 million; 
Usable square feet: 91,000. 

Fiscal year: 2014; 
Annual rent of leases: $48.2 million; 
Usable square feet: 1,035,000. 

Fiscal year: 2015; 
Annual rent of leases: $99.5 million; 
Usable square feet: 1,547,000. 

Fiscal year: 2016; 
Annual rent of leases: $34.7 million; 
Usable square feet: 763,000. 

Fiscal year: 2017; 
Annual rent of leases: $19.0 million; 
Usable square feet: 390,000. 

Fiscal year: 2018; 
Annual rent of leases: $33.5 million; 
Usable square feet: 1,047,000. 

Fiscal year: 2019; 
Annual rent of leases: $24.4 million; 
Usable square feet: 479,000. 

Fiscal year: 2020; 
Annual rent of leases: $4.5 million; 
Usable square feet: 132,000. 

Fiscal year: 2021; 
Annual rent of leases: $11.7 million; 
Usable square feet: 230,000. 

Fiscal year: 2022; 
Annual rent of leases: $2.7 million; 
Usable square feet: 84,000. 

Fiscal year: 2023; 
Annual rent of leases: $49.7 million; 
Usable square feet: 871,000. 

Source: GAO analysis of DHS data. GAO-14-648. 

[End of figure] 

DHS officials told us that, given delays moving the project forward 
and the expiration of existing leases, DHS is currently working with 
GSA to renegotiate leases where staff of individual components are 
currently housed. However, DHS acknowledged that a comprehensive 
analysis of its real property and leasing options in the NCR--which 
has a direct bearing on development options at St. Elizabeths--is 
ongoing, but not complete, and documents related to the analysis have 
not been finalized. 

Given uncertainties about the size, scope, and timing of the project 
moving forward as well as the overall cost of the project to the 
government--DHS and GSA would be better positioned to make choices 
about capital investments if they were to identify and analyze a 
broader range of alternatives and use this alternatives analysis to 
inform their prioritization and selection of efforts related to 
headquarters consolidation. For example, a comprehensive alternatives 
analysis could take into account (1) DHS's actual and projected 
leasing costs for locations where employees are currently housed; (2) 
DHS and GSA costs to develop additional segments of the St. Elizabeths 
Campus, as well as any transportation and infrastructure improvements; 
and (3) a range of leasing and construction alternatives and their 
associated costs for the St. Elizabeths site, depending on a 
determination of usable square footage needed. After identifying and 
analyzing a range of alternatives that better reflects current 
conditions, DHS and GSA would be better positioned to prioritize the 
individual steps or projects that will compose the larger headquarters 
consolidation effort. Given that $1.5 billion has already been 
invested in the headquarters consolidation, a comprehensive analysis 
and prioritization of alternatives, including cost and benefit 
analyses for each of the alternatives being considered, that accounts 
for the complete costs and benefits to the federal government as a 
whole, would improve transparency and allow for more informed decision 
making by DHS and GSA leadership and Members of Congress. 

Project Review and Approval Process Does Not Consistently Follow DHS 
Acquisition Standards: 

DHS has not consistently applied its major acquisition guidance for 
reviewing and approving the headquarters consolidation project. 
Leading practices call for agencies to establish a formal process for 
senior management to review and approve proposed capital assets. The 
cost of a proposed asset, the level of risk involved in acquiring the 
asset, and its importance to achieving the agency mission should be 
considered when defining criteria for executive review. Leading 
organizations have processes that determine the level of review and 
analysis based on the size, complexity, and cost of a proposed 
investment or its organization-wide impact. DHS has guidelines in 
place to provide senior management the opportunity to review and 
approve its major projects, but DHS has not consistently applied these 
guidelines to its efforts to work with GSA to plan and implement 
headquarters consolidation. As discussed below, DHS has sometimes, but 
not always, classified the consolidation project as a major 
acquisition, which has affected the extent to which the department has 
oversight of the project. By not consistently applying this review 
process to headquarters consolidation, DHS management risks losing 
insight into the progress of the St. Elizabeths project, as well as 
how the project fits in with its overall acquisitions portfolio. 

DHS programs designated as major acquisitions are governed by the 
policies and processes contained in DHS Acquisition Management 
Directive 102-01 (MD 102) and the accompanying DHS Instruction Manual 
102-01-001.[Footnote 27] MD 102 establishes an acquisition life-cycle 
consisting of four phases.[Footnote 28] According to MD 102, an 
acquisition program is considered a Level 1 Major Acquisition if its 
life-cycle cost is at or above $1 billion, and a Level 2 Major 
Acquisition if its life-cycle cost is $300 million or more, but less 
than $1 billion. At predetermined points throughout the life-cycle--
known as Acquisition Decision Events--a program deemed to be a major 
acquisition undergoes review by a designated senior official, referred 
to as the Acquisition Decision Authority, to assess whether the 
program is ready to proceed through each of the four phases. An 
important aspect of this process is the review and approval of key 
acquisition documents that, among other things, establish the need for 
a major program, its operational requirements, and an acquisition 
baseline and plan.[Footnote 29] MD 102 also requires that a DHS 
Investment Review Board (IRB) review major acquisitions programs at 
Acquisition Decision Events and other meetings, as needed. The IRB is 
chaired by the Acquisition Decision Authority and made up of other 
senior officials from across the department responsible for managing 
DHS mission objectives, resources, and contracts. DHS's Office of 
Program Accountability and Risk Management (PARM) is responsible for 
DHS's overall acquisition governance process, supports the IRB, and 
reports directly to the DHS Chief Acquisition Officer. PARM is to 
develop and update program management policies and practices, oversee 
the acquisition workforce, provide support to program managers, and 
collect program performance data. Our prior work has assessed MD 102 
and found that it establishes a knowledge-based acquisition policy for 
program management that is largely consistent with key practices. 
[Footnote 30] 

DHS has designated the headquarters consolidation project as a major 
acquisition in some years but not in others. In 2010 and 2011, DHS 
identified the headquarters consolidation project as a major 
acquisition and included the project on DHS's Major Acquisition 
Oversight List.[Footnote 31] Thus, the project was subject to the 
oversight and management policies and procedures established under MD 
102. In 2012, the project as a whole was dropped from the list, and in 
2013 DHS included the IT acquisition portion of the project on the 
list. DHS issued the 2014 list in June 2014, which again included the 
IT portion of the project, but not the entire project.[Footnote 32] 
Figure 6 shows the extent to which the headquarters consolidation 
project has or has not been considered a major acquisition by DHS 
under MD 102. 

Figure 6: Department of Homeland Security's (DHS) Consideration of the 
Headquarters Consolidation as a Major Acquisition Has Varied: 

[Refer to PDF for image: illustrated table] 

Program on DHS major acquisition oversight list: 
Fiscal year: 
2010: Overall program; 
2011: Overall program; 
2012: [Empty]; 
2013: Information technology component of program
2014: Information technology component of program 

Program not on DHS major acquisition oversight list: 
Fiscal year: 
2010: [Empty]; 
2011: [Empty]; 
2012: Overall program
2013: [Empty]; 
2014: [Empty]. 

Source: GAO analysis of DHS data; Art Explosion (clip art). GAO-14-648. 

Note: A DHS acquisition program is considered a Level 1 Major 
Acquisition if its life-cycle cost is at or above $1 billion, and a 
Level 2 Major Acquisition if its life-cycle cost is $300 million or 
more, but less than $1 billion. 

[End of figure] 

PARM officials explained that they considered the St. Elizabeths 
project to be more of a GSA acquisition than a DHS acquisition because 
GSA owns the site and the majority of building construction is funded 
through GSA appropriations. Furthermore, they stated that DHS 
appropriations for the project are largely transferred to GSA through 
interagency mechanisms so that, in effect, GSA is responsible for 
managing contracts procured with DHS funding. PARM officials also 
explained that they did not believe that the IT portion of the St. 
Elizabeths project should be classified as a DHS major acquisition. 
They said that although the IT acquisitions are a DHS responsibility 
and funded with DHS appropriations, GSA is managing the IT contracts 
and therefore they believe those acquisitions' oversight should reside 
with GSA. They said that the reason the IT component was placed on the 
Major Acquisition Oversight List in 2013 was because the DHS Office of 
Inspector General (OIG) recommended its inclusion.[Footnote 33] When 
asked why the overall headquarters consolidation program was 
previously identified by DHS as a major acquisition in earlier years, 
and what had changed, PARM officials said that it was likely included 
on past acquisition lists because it was a new program and DHS and GSA 
roles and responsibilities had yet to be firmly established. 

We recognize that GSA has responsibility for managing contracts 
associated with the headquarters consolidation project. However, a 
variety of factors, including the overall cost, scope, and visibility 
of the project, as well as the overall importance of the project in 
the context of DHS's mission, make the consolidation project a viable 
candidate for consideration as a major acquisition. As noted above, an 
acquisition program is considered a Level 1 Major Acquisition if its 
life-cycle cost is at or above $1 billion. DHS and GSA were unable to 
provide an estimate of the life-cycle cost for the St. Elizabeths 
project. However, under the current plan, DHS reports it will need 
about $1.7 billion to complete the project by 2026, not including life-
cycle cost, well above the normal threshold required for a major 
acquisition classification called for by MD 102. Furthermore, per MD 
102, the Acquisition Review Board may consider a project a candidate 
for oversight under MD 102 if the project's importance to DHS's 
strategic and performance plans is disproportionate to its size, or if 
the project has high executive visibility, impacts more than one DHS 
component, has significant program or policy implications, or if the 
Deputy Secretary, Chief Acquisition Officer or Acquisition Decision 
Authority recommends an increase to a higher acquisition level. Given 
the size and scope of the project and the extent to which the 
completion of the project could impact the performance of DHS's 
mission, the headquarters consolidation project should be considered a 
candidate for treatment as a major acquisition under MD 102. If DHS 
were to consider the headquarters consolidation project a major 
acquisition, consistent with MD 102 requirements, DHS would be better 
positioned to oversee the project and provide decision makers in DHS 
and Congress, and the taxpayer greater assurance that the project is 
being acquired on-time and on-budget. 

We also observed that, during the years (2010, 2011, 2013, and 2014) 
that the headquarters consolidation project, or portions of it, was on 
DHS's major acquisition list and therefore subject to MD 102 
requirements, the project did not comply with major acquisition 
requirements as outlined by DHS guidelines. Specifically, the project 
has not produced any of the required key acquisition documents 
requiring department-level approval: (1) mission need statement, (2) 
capability development plan, (3) operational requirements document, 
(4) integrated logistics support plan, (5) life-cycle cost estimate, 
(6) acquisition program baseline, and (7) test and evaluation master 
plan. Furthermore, one role of PARM is to conduct independent 
evaluations of major programs' health and risks, but PARM has not 
assessed the St. Elizabeths project as of March 2014. PARM officials 
stated, however, that they informally monitor the project through 
regular communication with DHS officials who oversee the St. 
Elizabeths project and have no concerns about the project's 
management. In accordance with MD 102, the IRB's predecessor body--the 
Acquisition Review Board--reviewed the headquarters consolidation 
program with a focus on ARRA funding in 2009 and 2010, but has not 
reviewed the program since then, even though the program as a whole 
was considered a major acquisition in 2011, and likewise with the IT 
component in 2013 and 2014. In May 2010, the board generally expressed 
concern about the level of DHS oversight given that the project was 
highly visible and important for the department, and recommended 
senior leadership meetings between DHS and GSA. In September 2010, DHS 
and GSA signed a memorandum of understanding that defined certain 
roles for both agencies regarding project oversight. As noted earlier, 
DHS officials stated the headquarters consolidation has not undergone 
review by the IRB since 2010 because they viewed it as primarily a GSA 
project. 

DHS officials also stated that the program was under way before MD 102 
was issued and that the directive requirements were not applicable. In 
addition, officials stated that they regularly briefed leadership on 
the status of the project and have produced some documentation, such 
as a needs assessment and baseline, which officials said are similar 
to documents required by MD 102. For example, the St. Elizabeths 
baseline contains some cost and schedule information for the project 
as required by MD 102. However, it does not contain other required 
information to help measure program performance. In addition, a 2010 
update to MD 102 stated the directive requirements are to be applied 
to the maximum extent possible to all major acquisitions in existence 
when the update was issued. According to DHS acquisition officials, 
since 2010, the DHS Acquisition Officer has issued waivers for some 
legacy programs, but not for the headquarters consolidation program or 
its IT component. Although the St. Elizabeths program managers may 
provide visibility of the project to leadership and may have similar 
key documentation, this falls short of the requirements contained in 
MD 102. The MD 102 process provides a more consistent, transparent 
review process that would involve a greater cross section of 
departmental stakeholders, among other things, especially given the 
magnitude of the project and the numbers of components that would 
occupy space at St. Elizabeths. 

DHS has established through MD 102 an acquisitions policy for major 
capital assets that provides the agency with tools to better manage 
large projects. For example, regular project review and approval by a 
cross section of departmental leadership, along with having 
standardized project documentation, can help mitigate significant 
acquisitions challenges such as funding instability and capability 
changes. Furthermore, the MD 102 process provides oversight and 
facilitates program accountability. If the entire headquarters 
consolidation program were designated as a major acquisition, DHS 
would be better positioned to follow its own acquisition policy. 
Utilizing the MD 102 review framework could provide the structure for 
more efficient program management and provide DHS, Congress, and 
taxpayers greater assurance that government funds are being spent in a 
way that is consistent with sound acquisition practices, and the 
project is moving forward as intended. 

DHS and GSA Cost and Schedule Estimates for the St. Elizabeths Project 
Do Not Conform with Leading Practices: 

DHS and GSA cost and schedule estimates for the headquarters 
consolidation project at St. Elizabeths do not or only minimally or 
partially conform with leading estimating practices, and are therefore 
unreliable. Furthermore, in some areas, the cost and schedule 
estimates do not fully conform with GSA guidance relevant to 
developing estimates. Developing cost and schedule estimates 
consistent with leading practices could promote greater transparency 
and provide decision makers needed information about the St. 
Elizabeths project and the larger DHS headquarters consolidation 
effort. 

St. Elizabeths Cost and Schedule Estimates Are Unreliable: 

DHS and GSA cost and schedule estimates for the headquarters 
consolidation project at St. Elizabeths contain numerous deficiencies 
that do not reflect leading practices, which render the estimates 
unreliable. In 2013, DHS and GSA updated earlier estimates to produce 
the current St. Elizabeths cost and schedule estimates summarized in 
figure 7.[Footnote 34] These DHS and GSA estimates showed a total 
project cost of about $4.5 billion--$2.8 billion funded through GSA 
appropriations and the remaining $1.7 billion funded through DHS 
appropriations. According to the 2013 estimates provided by DHS and 
GSA, based on this level of funding, the project would be completed in 
2026. 

Figure 7: St. Elizabeths Development Baseline Updated in 2013: 

[Refer to PDF for image: illustrated timeline] 

Major construction element: Phase 1: U.S. Coast Guard; 
Fiscal year: 2009[A]-2014; 
Total cost: $1.394 billion. 

Major construction element: Phase 2: DHS leadership; Federal Emergency 
Management Agency Operations center; Transportation infrastructure; 
Fiscal year: 2014-2021; 
Total cost: $1.879 billion. 

Major construction element: Phase 3: Transportation Security 
Administration; Customs and Border Protection; Immigration and Customs 
Enforcement; Other management; 
Fiscal year: 2020-2026; 
Total cost: $1,275 billion. 

Total overall cost: $4.548 billion. 

Source: GAO summary of Department of Homeland Security and General 
Services Administration data. GAO-14-648. 

[A] Total cost includes approximately $64 million received in prior 
fiscal years. 

[End of figure] 

We compared the 2013 cost estimate and the 2008 and 2013 schedule 
estimates with leading practices for developing such estimates and 
found that the estimates do not or only minimally or partially conform 
with key characteristics for developing reliable estimates. 
Specifically, we compared DHS and GSA overall project cost estimates 
with the GAO Cost Estimating and Assessment Guide (Cost 
Guide),[Footnote 35] which defines leading practices related to four 
characteristics--comprehensive, well documented, accurate, and 
credible--that are important to developing high-quality, reliable cost 
estimates.[Footnote 36] We also compared DHS and GSA overall schedule 
estimates with the GAO Schedule Assessment Guide,[Footnote 37] which 
defines leading practices related to four characteristics--
comprehensive, well constructed, credible, and controlled--that are 
important to developing high-quality, reliable schedule estimates. 
[Footnote 38] Tables 5 and 6 describe the characteristics of high-
quality, reliable cost and schedule estimates that served as the 
foundation of our comparative analysis. 

Table 5: Four Characteristics of a High-Quality, Reliable Cost 
Estimate: 

Characteristic: Comprehensive; 
Description: The cost estimate should include both government and 
contractor costs of the program over its full life cycle, from 
inception of the program through design, development, deployment, and 
operation and maintenance to retirement of the program. It should also 
completely define the program, reflect the current schedule, and be 
technically reasonable. Comprehensive cost estimates should be 
structured in sufficient detail to ensure that cost elements are 
neither omitted nor double counted. Specifically, the cost estimate 
should be based on a product-oriented work breakdown structure (WBS) 
that allows a program to track cost and schedule by defined 
deliverables, such as hardware or software components. Finally, where 
information is limited and judgments must be made, the cost estimate 
should document all cost-influencing ground rules and assumptions. 

Characteristic: Well documented; 
Description: A good cost estimate--while taking the form of a single 
number--is supported by detailed documentation that describes how it 
was derived and how the expected funding will be spent in order to 
achieve a given objective. Therefore, the documentation should capture 
in writing such things as the source data used, the calculations 
performed and their results, and the estimating methodology used to 
derive each WBS element's cost. Moreover, this information should be 
captured in such a way that the data used to derive the estimate can 
be traced back to and verified against their sources so that the 
estimate can be easily replicated and updated. The documentation 
should also discuss the technical baseline description and how the 
data were normalized. Finally, the documentation should include 
evidence that the cost estimate was reviewed and accepted by 
management. 

Characteristic: Accurate; 
Description: The cost estimate should provide for results that are 
unbiased, and it should not be overly conservative or optimistic. An 
estimate is accurate when it is based on an assessment of most likely 
costs; adjusted properly for inflation; and contains few, if any, 
minor mistakes. In addition, a cost estimate should be updated 
regularly to reflect significant changes in the program--such as when 
schedules or other assumptions change--and actual costs, so that it is 
always reflecting current status. During the update process, variances 
between planned and actual costs should be documented, explained, and 
reviewed. Among other things, the estimate should be grounded in a 
historical record of cost estimating and actual experiences on other 
comparable programs. 

Characteristic: Credible; 
Description: The cost estimate should discuss any limitations of the 
analysis because of uncertainty or biases surrounding data or 
assumptions. Major assumptions should be varied, and other outcomes 
recomputed to determine how sensitive they are to changes in the 
assumptions. Risk and uncertainty analysis should be performed to 
determine the level of risk associated with the estimate. Further, the 
estimate's cost drivers should be cross-checked, and an independent 
cost estimate conducted by a group outside the acquiring organization 
should be developed to determine whether other estimating methods 
produce similar results. 

Source: GAO. GAO-14-648. 

[End of table] 

Table 6: Four Characteristics of a High-Quality, Reliable Schedule 
Estimate: 

Characteristic: Comprehensive; 
Description: A comprehensive schedule includes all activities for both 
the government and its contractors necessary to accomplish a project's 
objectives as defined in the project's work breakdown structure (WBS). 
The schedule includes the labor, materials, travel, facilities, 
equipment, and the like needed to do the work and depicts when those 
resources are needed and when they will be available. It realistically 
reflects how long each activity will take and allows for discrete 
progress measurement. 

Characteristic: Well constructed; 
Description: A schedule is well constructed if all its activities are 
logically sequenced with the most straightforward logic possible. 
Unusual or complicated logic techniques are used judiciously and 
justified in the schedule documentation. The schedule's critical path 
represents a true model of the activities that drive the project's 
earliest completion date, and total float accurately depicts schedule 
flexibility. 

Characteristic: Credible; 
Description: A schedule that is credible is horizontally traceable--
that is, it reflects the order of events necessary to achieve 
aggregated products or outcomes. It is also vertically traceable: 
Activities in varying levels of the schedule map to one another and 
key dates presented to management in periodic briefings are in sync 
with the schedule. Data about risks and opportunities are used to 
predict a level of confidence in meeting the project's completion 
date. The level of necessary schedule contingency and high-priority 
risks and opportunities are identified by conducting a robust schedule 
risk analysis. 

Characteristic: Controlled; 
Description: A schedule is controlled if it is updated periodically by 
trained schedulers using actual progress and logic to realistically 
forecast dates for program activities. It is compared against a 
designated baseline schedule to measure, monitor, and report the 
project's progress. The baseline schedule is accompanied by a baseline 
document that explains the overall approach to the project, defines 
ground rules and assumptions, and describes the unique features of the 
schedule. The baseline schedule and current schedule are subject to a 
configuration management control process. 

Source: GAO. GAO-14-648. 

[End of table] 

We have applied our leading cost and schedule estimation practices in 
past work involving federal construction projects, and the leading 
practices were developed in conjunction with numerous stakeholders 
from government and the private sector, including DHS and GSA. 
[Footnote 39] Furthermore, GSA acknowledged the value of our leading 
cost estimation practices in 2007 and issued an order to apply the 
principles to all cost estimates prepared in every GSA project, 
process, or organization.[Footnote 40] 

For both the cost and schedule estimates, our analysis focused on how 
well DHS and GSA met each of the four characteristics based on our 
assessment of conformance to the leading practices associated with 
that characteristic. We then arrayed the extent to which DHS and GSA 
cost and schedule estimates conformed with the four characteristics of 
each using five rating categories--fully meets, substantially meets, 
partially meets, minimally meets, or does not meet.[Footnote 41] We 
considered cost and schedule estimates to be reliable if the overall 
assessment ratings for each of the four characteristics were 
substantially or fully met. Conversely, if our analysis showed that 
any of the characteristics were not met, minimally met, or partially 
met, then the estimate did not fully reflect the characteristics of a 
high-quality estimate and cannot be considered reliable. The following 
two sections provide an overview of the results of our comparison of 
DHS and GSA cost and schedule estimates with the four characteristics 
for each of GAO's cost-and schedule-estimating guidelines. 

St. Elizabeths Cost Estimate Partially or Minimally Conforms with 
Leading Practices: 

Our overall comparison of the 2013 cost estimate for St. Elizabeths 
development with leading cost-estimating best practices showed that 
the estimate partially or minimally conforms with leading practices. 
Specifically, we found that the cost estimate for the headquarters 
consolidation at St. Elizabeths partially conforms with leading 
practices associated with the characteristics of comprehensive and 
well-documented estimates, and minimally conforms with leading 
practices associated with characteristics of accurate and credible 
estimates. 

We assessed the DHS and GSA cost estimate using the framework of the 
four characteristics above associated with high-quality, reliable cost 
estimates. Table 7 shows the overall results of our comparison along 
with examples of selected leading practices under each characteristic 
and our rationale for assessment. Appendix V provides greater detail 
on our comparison of the estimate with specific leading practices that 
constitute the four cost-estimating characteristics. 

Table 7: Summary Assessment of 2013 St. Elizabeths Development Cost 
Estimate Compared with Leading Practices: 

Characteristic: Comprehensive; 
GAO assessment: Partially meets; 

Selected leading practice: Include all life-cycle costs; 
Examples of rationale for assessment: Estimate does not include annual 
costs for the full useful life of the campus or costs for all civilian 
and contractor support personnel. 

Selected leading practice: Completely define program, reflect current 
schedule, and be technically reasonable; 
Examples of rationale for assessment: Estimate is not technically 
reasonable because ground rules and assumptions have not been updated 
for several years, other than adjustment for inflation. 

Characteristic: Well documented; 
GAO assessment: Partially meets; 

Selected leading practice: Use data that are adequate for easily 
updating the estimate to reflect actual costs or program changes so 
that they can be used for future estimates; 
Examples of rationale for assessment: Several data items are built 
into the estimate's cost model and are not adjustable, which makes it 
difficult to update the model to reflect actual costs or program 
changes. 

Selected leading practice: Describe how the estimate was developed so 
that a cost analyst unfamiliar with the program could understand and 
replicate the estimate; 
Examples of rationale for assessment: Key content related to the 
estimate was contained in several disjointed documents, and an analyst 
unfamiliar with the program could not understand and replicate the 
estimate without significant additional information. 

Characteristic: Accurate; 
GAO assessment: Minimally meets; 

Selected leading practice: Produce results that are unbiased, not 
overly conservative or optimistic, and based on an assessment of most 
likely costs; 
Examples of rationale for assessment: Estimate is optimistic in 
assuming that none of the costs grew more than the overall inflation 
rate, and does not include an uncertainty analysis to evaluate whether 
the estimate is based on most likely costs. 

Selected leading practice: Regularly update estimate to reflect 
significant changes in the program; 
Examples of rationale for assessment: Estimate is not regularly 
updated to reflect significant changes to the program, other than 
adjustments based on available funding. 

Characteristic: Credible; 
GAO assessment: Minimally meets; 

Selected leading practice: Conduct sensitivity analysis that 
identifies a range of possible costs; 
Examples of rationale for assessment: No sensitivity analysis was 
performed on the cost estimate. 

Selected leading practice: Conduct independent cost estimate by a 
group outside the acquiring organization; 
Examples of rationale for assessment: DHS/GSA did not obtain an 
independent cost estimate to determine whether other estimating 
methods produce similar results. 

Fully meets: DHS/GSA provided complete evidence that satisfies the 
entire criterion: 

Substantially meets: DHS/GSA provided evidence that satisfies a large 
portion of the criterion: 

Partially meets: DHS/GSA provided evidence that satisfies about 
half of the criterion: 

Minimally meets: DHS/GSA provided evidence that satisfies a small 
portion of the criterion: 

Does not meet: DHS/GSA provided no evidence that satisfies any of 
the criterion: 

Source: GAO analysis of Department of Homeland Security and General 
Services Administration cost data. GAO-14-648. 

[End of table] 

A reliable cost estimate is critical to the success of any program. 
Such an estimate provides the basis for informed investment decision 
making, realistic budget formulation and program resourcing, 
meaningful progress measurement, proactive course correction when 
warranted, and accountability for results. Accordingly, DHS and GSA 
would benefit from maintaining current and well-documented estimates 
of project costs at St. Elizabeths--even if project funding is not 
fully secured--and these estimates should encompass the full life-
cycle of the program and be independently assessed. Among other 
things, OMB states that generating reliable program cost estimates is 
a critical function necessary to support OMB's capital programming 
process. Without this capability, DHS and GSA are at greater risk of 
experiencing cost overruns, missed deadlines, and performance 
shortfalls related to the headquarters consolidation program. 

St. Elizabeths Schedule Estimates Minimally Conform with Leading 
Practices: 

Our overall comparison of DHS and GSA schedule estimates with leading 
schedule-estimating practices showed that the most recent schedule 
estimate DHS and GSA prepared with sufficient detail for the entire 
project--in 2008--minimally conforms with leading practices. 
Specifically, the 2008 estimate minimally conforms with leading 
practices related to each of the characteristics of comprehensive, 
well-constructed, credible, and controlled estimates. 

We assessed DHS and GSA schedule estimates using the framework of the 
four characteristics above associated with high-quality, reliable 
schedule estimates. Table 8 shows the overall results of our analysis 
of the 2008 schedule estimate, along with examples of select leading 
practices under each characteristic and our rationale for assessment. 
We highlighted the results of the 2008 schedule comparison because the 
2008 schedule was the most recent schedule that included logic 
necessary for identifying a critical path. As noted above, at the 
request of GSA, we also analyzed a schedule estimate updated in 2013. 
However, the 2013 estimate was incomplete and did not cover the 
overall consolidation program in sufficient detail. For example, the 
schedule depicts only high-level activities and does not provide 
details needed to understand the sequence of events, including work to 
be performed in fiscal years 2014 and 2015. As a result, the 2013 
schedule satisfied fewer leading practices than the 2008 schedule, and 
is also unreliable. Appendix VI provides greater detail on our 
comparison of both the 2008 and 2013 estimates with 10 specific 
leading practices that compose the four schedule estimating 
characteristics. 

Table 8: Summary Assessment of 2008 St. Elizabeths Development 
Schedule Estimate Compared with Leading Practices: 

Characteristic: Comprehensive; 
GAO assessment: Minimally meets; 

Select leading practice: Capture all activities; 
Examples of rationale for assessment: Estimate does not include all 
activities for both the government and its contractors necessary to 
accomplish the project's objectives. 

Select leading practice: Assign resources to all activities; 
Examples of rationale for assessment: Schedule does not account for 
when all resources (such as labor, materials, travel, facilities, and 
equipment) are needed and when they will be available. 

Characteristic: Well constructed; 
GAO assessment: Minimally meets; 

Select leading practice: Sequence all activities; 
Examples of rationale for assessment: Parts of the estimate are not 
logically sequenced, and DHS/GSA utilized unusual and complicated 
logic techniques without justification in the schedule documentation. 

Characteristic: Credible; 
GAO assessment: Minimally meets; 

Select leading practice: Verify that the schedule is traceable 
horizontally and vertically[A]; 
Examples of rationale for assessment: Schedule's sequencing of events 
necessary to achieve outcomes could not be verified because DHS/GSA 
could not provide sufficient documentation. 

Select leading practice: Conduct a schedule risk analysis; 
Examples of rationale for assessment: Estimate does not include a risk 
assessment to predict a level of confidence in the project's 
completion date. 

Characteristic: Controlled; 
GAO assessment: Minimally meets; 

Select leading practice: Update the schedule with actual progress and 
logic; 
Examples of rationale for assessment: DHS/GSA has not updated the 
schedule containing the entire program since December 2008. 

Select leading practice: Maintain a baseline schedule; 
Examples of rationale for assessment: DHS/GSA could not provide a 
baseline schedule document that explains the overall approach to the 
project, defines ground rules and assumptions, and describes the 
unique features of the schedule. 

Fully meets: DHS/GSA provided complete evidence that satisfies the 
entire criterion: 

Substantially meets: DHS/GSA provided evidence that satisfies a large 
portion of the criterion: 

Partially meets: DHS/GSA provided evidence that satisfies about 
half of the criterion: 

Minimally meets: DHS/GSA provided evidence that satisfies a small 
portion of the criterion: 

Does not meet: DHS/GSA provided no evidence that satisfies any of 
the criterion: 

Source: GAO analysis of Department of Homeland Security and General 
Services Administration schedule data. GAO-14-648. 

[A] A schedule that is credible is horizontally traceable--that is, it 
reflects the order of events necessary to achieve aggregated products 
or outcomes. It is also vertically traceable: activities in varying 
levels of the schedule map to one another and key dates presented to 
management in periodic briefings are in sync with the schedule. 

[End of table] 

In accordance with leading schedule estimation practices, the success 
of a major program such as the consolidation project at St. Elizabeths 
depends in part on having an integrated and reliable master schedule 
that defines when work will occur and how long it will take and how 
each activity is related to the others. For example, the program 
schedule provides not only a road map for systematic project execution 
but also the means by which to gauge progress, identify and resolve 
potential problems, and promote accountability at all levels of the 
program. A program schedule is also a vehicle for developing a time-
phased budget baseline and an essential basis for managing trade-offs 
among cost, schedule, and scope. Accordingly, and despite current 
funding uncertainty for the project, DHS and GSA would benefit from 
developing a comprehensive schedule for the St. Elizabeths 
consolidation project in accordance with leading practices. DHS and 
GSA officials, as discussed in more detail below, generally did not 
agree with this overall assessment because they believe the leading 
practices are not well-suited for the type of complex construction 
projects occurring at the St. Elizabeths site. 

St. Elizabeths Cost and Schedule Estimates Do Not Always Conform with 
GSA Project-Estimating Guidance: 

We compared the cost and schedule estimates prepared by DHS and GSA 
for the St. Elizabeths project with relevant GSA guidance and found 
that the estimates do not always conform with agency estimating 
requirements.[Footnote 42] In commenting on our assessments of the St. 
Elizabeths cost and schedule estimates, DHS and GSA officials 
acknowledged that the estimates do not fully conform with our leading 
practices, but said that the estimates do conform with GSA project 
estimation policies. GSA officials agreed with the underlying 
objectives of our leading cost-and schedule-estimating practices, but 
noted that other methodologies are valid and better suited to GSA 
projects like construction at St. Elizabeths. GSA officials cited 
GSA's Project Estimating Requirements for the Public Buildings 
Service, also called P-120, and GSA's Facilities Standards for the 
Public Buildings Service, also called P-100, as the key documents for 
estimating and managing building construction programs within GSA. 
[Footnote 43] Because P-120 and P-100 focus on cost estimation 
requirements and do not fully describe schedule estimation, GSA 
officials subsequently provided us with GSA's Global Project 
Management (gPM) guidance as an additional source as it includes the 
Scheduling Fundamental Guide.[Footnote 44] 

We reviewed the GSA guidance listed above and noted several areas 
where GSA cost and scheduling-estimating policies align with our 
leading practices. More specifically, 8 of the 12 steps of a high-
quality cost estimate were at least partially reflected in GSA 
guidance, and 5 of our 10 leading schedule-estimating practices were 
at least partially reflected. For example, GSA's P-100 guidance fully 
reflects our leading cost estimation practice of "defining the 
program's characteristics," as it contains formal, detailed design 
standards and criteria for construction of new facilities and repairs 
or alterations to existing buildings. GSA's gPM guidance fully 
reflects our leading schedule estimation practice of "capturing all 
activities," as it states that the first step in building a schedule 
is to identify all activities required to complete the project and 
recommends incorporating the activities to the project's Work 
Breakdown Structure (WBS)--a framework for documenting certain 
activities like estimating costs, identifying resources, determining 
where risks may occur, and providing the means for measuring program 
status. 

In cases where GSA guidance and our leading practices align, we 
compared the St. Elizabeths cost estimates with GSA guidance and found 
some areas where the project estimates were developed consistent with 
the guidance. For example, P-120 and P-100 call for GSA to establish a 
set of ground rules for estimating GSA construction projects, such as 
how inflation is applied or how budget constraints might affect the 
project. Our comparison of the St. Elizabeths project cost estimate 
with GSA guidance showed that the project estimate documents the 
ground rules consistent with the guidance. Likewise, P-120 recommends 
using a WBS for projects to be funded over more than 1 year. Our 
comparison showed that the estimate included a WBS that outlined the 
end product and major program effort. 

In contrast, we also found areas where the 2013 St. Elizabeth cost 
estimate was not prepared consistent with GSA guidelines. 
Specifically, our comparison showed that the project cost estimate: 

* Does not include a life-cycle cost analysis. P-120 and P-100 both 
require that a life-cycle cost analysis be conducted to help determine 
the value of a project beyond just the cost of acquiring it, such as 
the cost of repairs, operations, preventive maintenance, logistic 
support utilities, and depreciation over the useful lifetime of the 
facility. P-100 states, for example, that "three characteristics 
distinguish GSA buildings from buildings built for the private sector: 
longer life span, changing occupancies, and the use of a life-cycle 
cost approach to determine overall project cost." No life-cycle cost 
analysis for St. Elizabeths is reflected in the estimate, including 
the cost of repair, operations, and maintenance. 

* Is not regularly updated to reflect significant changes in the 
program. P-120 guidance states that the cost estimates for design 
projects should be updated throughout the design process, and 
furthermore, where costs are included, design assumptions must be 
addressed in order to completely define the scope of the estimate. We 
found that the estimate was updated based on available funding, but 
was not regularly updated to reflect significant changes to the 
program including actual costs. 

* Does not include an independent cost estimate. P-100 states that GSA 
will develop two separate independent government estimates (IGE) to 
aid in effective project controls and assist in tracking the budget. 
The GSA definition of IGE does not completely align with the GAO 
definition of an independent cost estimate, but no IGEs were conducted 
for the entire St. Elizabeths project. 

With regard to St. Elizabeths 2008 and 2013 schedule estimates, we 
found some instances where the project schedule estimates were 
partially consistent with GSA guidelines--the estimates covered 
elements of the guidance--and others where they did not. For example, 
P-120 states that schedules should realistically reflect how long each 
activity should take. Our comparison of the St. Elizabeths schedule 
estimates with GSA guidance showed that the project estimates 
partially establish the duration of all activities--a factor that is 
reflected in both the 2008 and 2013 schedule estimates. Likewise, 
GSA's gPM states that activities should be sequenced after they have 
been defined and their duration has been estimated, tracked according 
to start and finish dates, and structured to show relationships 
between them to reflect their dependency on each other. Our comparison 
showed that the 2008 schedule estimate (not the 2013 estimate) 
partially reflected these gPM guidelines. In those instances where 
schedule estimates were not prepared in a manner consistent with GSA 
guidelines, we found that the 2008 and 2013 schedule estimates: 

* Do not capture all project activities. GSA's gPM states that the 
first step in building a schedule is to identify all activities 
required to complete the project. GSA scheduling guidance also 
recommends incorporating the activities into the project's WBS as this 
feature helps to organize and define the total scope of the project. 
However, we observed that the St. Elizabeths schedules did not define 
in detail the work necessary to accomplish a project's objectives, 
including activities both the government and contractors are to 
perform. 

* Do not contain an updated Integrated Master Schedule (IMS). GSA's 
gPM stresses the importance of regularly updating the schedule so that 
it represents the most up-to-date information on planned and completed 
activities, but we found no evidence that DHS and GSA maintained and 
regularly updated an IMS for the entire project. This includes 
providing a review of missed milestones, current expected completion 
dates, and actions needed to maintain/regain schedule progress. 

* Do not include a complete schedule baseline document. GSA's gPM 
states that establishing a baseline schedule that should be changed 
only with formal approvals from both the project team and the client 
is one of the four steps to establish a schedule. The gPM guidance 
also states that the baseline schedule should be maintained and that 
it should serve as the record of the "approved" schedule to allow the 
project manager to calculate variance. We found no evidence of a 
schedule baseline document that described the overall schedule, the 
sequencing of events, and the basis for activity durations, among 
other things, to help measure performance. 

Reliable cost and schedule estimates are critical to providing overall 
project transparency and also in providing information to a variety of 
decision makers. However, in commenting on our analysis of St. 
Elizabeths cost and schedule estimates, DHS and GSA officials said 
that it would be difficult or impossible to create reliable estimates 
that encompass the scope of the entire St. Elizabeths project. 
Officials said that given the complex, multiphase nature of the 
overall development effort, specific estimates are created for smaller 
individual projects, but not for the campus project as a whole. 
Therefore, in their view, leading estimating practices and GSA 
guidance cannot reasonably be applied to the high-level projections 
developed for the total cost and completion date of the entire St. 
Elizabeths project. In addition, DHS and GSA officials stated that 
given funding uncertainty for the St. Elizabeths project as a whole, 
they were reluctant to allocate resources to conduct more detailed 
cost and schedule estimates until additional appropriations were 
received. They described future project phases as "not real" until 
they are funded. They added that once funding for a project phase is 
secured, more complete estimates would be created as part of that 
segment's design. For example, regarding the schedule estimates, a 
senior DHS official said that at the programmatic level, since future 
phases of construction have not been authorized, funded, or designed, 
it would be illogical to develop anything beyond a generalized 
milestone schedule. GSA officials also commented that planning 
estimates for future unfunded work is conceptual and milestone based 
and therefore is sufficient for planning Phases 2 and 3. GSA stated 
that the higher-level, milestone schedule currently being used to 
manage the program is more flexible than the detailed schedule GAO 
proposes, and has proven effective even with the highly variable 
funding provided for the project. 

We found, however, that this high-level schedule is not sufficiently 
defined to effectively manage the program. For example, our review of 
the schedule showed that project bars in the schedule that represent 
the two active Phase 1 and Phase 2A efforts do not contain detailed 
schedule activities that include current government, contractor, and 
applicable subcontractor effort. Specifically, there is no detailed 
program schedule that enables the tracking of key deliverables, and 
the activities shown in the schedule address only high-level agency 
square footage segments, security, utilities, landscape, and road 
improvements. While we understand the need to keep future effort 
contained in high-level planning packages, in accordance with leading 
practices, near-term work occurring in fiscal years 2014 and 2015 
should have more detailed information. Further, there are no 
milestones identified that are consistent with the contract dates and 
other key dates established by management in the baseline schedule, 
and the project bars for near-term work are not mapped to a statement 
of work to ensure all effort is accounted for in the schedule. 
Finally, the project bars for near-term work also do not contain any 
risk mitigation activities. We recognize the challenges of developing 
reliable cost and schedule estimates for a large-scale, multiphase 
project like St. Elizabeths, particularly given its unstable funding 
history and that incorporating GAO's cost-and schedule-estimating 
leading practices may involve additional costs. However, unless DHS 
and GSA invest in these practices, Congress risks making funding 
decisions and DHS and GSA management risk making resource allocation 
decisions without the benefit that a robust analysis of levels of 
risk, uncertainty, and confidence provides. 

In addition to stating that it is not feasible to develop cost and 
schedule estimates for the entire St. Elizabeths project that conform 
with leading practices, DHS and GSA officials pointed to the project's 
performance to date as an indicator of sound overall management. 
Specifically, DHS and GSA officials maintained that Phase 1 of the 
overall consolidation project--primarily the USCG headquarters--was 
completed "on-schedule and near on-budget," after taking into account 
delays in the project start and smaller than expected annual 
appropriations, thus proving that their estimation practices were 
sound. As noted earlier, some of the work that was originally planned 
for Phase 1, such as utility installation; security measures; 
landscaping; and work on the visitors' center, historic auditorium, 
and access road, was deferred to later project stages. According to 
DHS and GSA officials, reducing the scope of Phase 1 enabled the 
project team to shift resources to more critical capabilities required 
for USCG occupancy, which resulted in on-schedule and near on-budget 
completion for the portion of Phase 1 funded by Congress. DHS and GSA 
officials maintained that the execution of Phase 1 was successful and 
that this should have factored into our analysis of cost and schedule 
estimates. However, our analysis of estimates is focused on the 
remaining work in the project, not the actual performance of work 
completed. Phase 1 results cannot be the sole basis used to forecast 
the reliability of cost and schedule estimates for the remaining 
phases of development at St. Elizabeths. As our analyses showed, the 
estimates were deficient in several areas, including 
comprehensiveness, accuracy, and credibility, which renders them 
unreliable in the context of future work. 

In addition to the planned work deferrals and reductions in scope 
described above, other unanticipated obstacles affected Phase 1 
project cost and schedule as well, but DHS and GSA officials did not 
document these impacts. For example, GSA officials noted that the 
original design for the Coast Guard fitness center was complete and 
construction was set to begin, but the building had to be redesigned 
and sunk farther underground after a historic preservation stakeholder 
objected to the structure's sight-lines. Also, toxic ash was 
unexpectedly discovered in the walls of one of the historic buildings, 
which required additional funds and time to remove.[Footnote 45] DHS 
and GSA officials were not able to tell us how much additional funding 
and time were required to redesign and construct the fitness center 
and to remediate the toxic ash. Overall, without documentation, we 
could not quantify the specific effects of these types of actions on 
Phase 1 cost growth and delays. Because DHS and GSA project cost and 
schedule estimates inform Congress's funding decisions and affect the 
agencies' abilities to effectively allocate resources across competing 
projects in their capital programs, there is a risk that funding 
decisions and resource allocations could be made based on information 
that is not reliable. 

Conclusions: 

Several factors have changed since DHS began planning its consolidated 
headquarters in 2005. New workplace standards allow more people to 
work in less space, and recent government-wide initiatives like Freeze 
the Footprint have prompted agencies to rethink their real property 
portfolios and lease arrangements. In addition, the DHS headquarters 
consolidation effort has not received the level of funding that DHS 
and GSA officials originally envisioned. By taking into account 
changing workplace standards and funding instability, assessing 
alternatives, prioritizing projects, and using the results of these 
analyses to inform the revised project plan in accordance with leading 
practices, DHS and GSA would be better positioned to assure decision 
makers within both agencies and in Congress that the consolidation 
project is justified. In addition, DHS has an acquisitions policy that 
generally aligns with leading capital decision-making practices, which 
applies to major acquisitions, as determined by cost criteria and 
other factors such as project visibility. However, DHS has moved the 
headquarters consolidation project or elements of the project on and 
off its list of major acquisitions over the last several years. 
Furthermore, during the periods when the project was identified by DHS 
as a major acquisition, the program did not fully comply with 
acquisition policy requirements, such as obtaining department-level 
approval of certain documents. Although GSA owns the site, funds the 
majority of the building construction, and oversees other contracts on 
behalf of DHS, given DHS's significant monetary investment, along with 
the project's visibility and potential impact on DHS missions, 
treating headquarters consolidation as a major acquisition and 
applying the policy to the maximum extent possible would provide 
greater assurance that government funds are being spent in a way that 
is consistent with sound acquisition practices and that the project is 
moving forward as intended. 

Creating reliable cost and schedule estimates for the headquarters 
consolidation project should be an integral part of DHS and GSA 
efforts to reassess the project. DHS and GSA current estimates do not 
conform with several leading practices, which make the estimates 
unreliable. Furthermore, in several instances, the cost and schedule 
estimates do not fully conform with GSA's estimation policies. 
Although DHS and GSA maintain that more comprehensive estimates will 
be conducted as the project advances and funding is secured, decision 
makers could benefit now from accurate estimates that encompass the 
life-cycle of the project. Without this information, it is difficult 
for agency leadership and Members of Congress to make informed 
decisions regarding resource allocations and compare competing 
priorities. Pending the development of reliable cost and schedule 
estimates, the project risks potential cost overruns, missed 
deadlines, and performance shortfalls. 

Recommendations for Executive Action: 

In order to improve transparency and allow for more informed decision 
making by congressional leaders and DHS and GSA decision-makers, we 
recommend that, before requesting additional funding for the DHS 
headquarters consolidation project, the Secretary of Homeland Security 
and the Administrator of the General Services Administration work 
jointly to take the following two actions: 

* conduct the following assessments and use the results to inform 
updated DHS headquarters consolidation plans: 

- a comprehensive needs assessment and gap analysis of current and 
needed capabilities that take into consideration changing conditions, 
and: 

- 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. 

* After revising the DHS headquarters consolidation plans, 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. 

We further recommend that the Secretary of Homeland Security designate 
the headquarters consolidation program a major acquisition, consistent 
with DHS acquisition policy, and apply DHS acquisition policy 
requirements. 

Matter for Congressional Consideration: 

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 NCR, and (3) 
develops and provides reliable cost and schedule estimates. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to DHS and GSA for review and 
comment. In written comments, DHS concurred with all three of the 
recommendations, and GSA concurred with the two recommendations that 
applied to it. DHS and GSA comments are summarized below and reprinted 
in appendix VII and appendix VIII respectively. 

* DHS and GSA concurred with our first recommendation that DHS and GSA 
conduct a comprehensive needs assessment and alternatives analysis. 
DHS and GSA commented that DHS and GSA have already completed a draft 
enhanced consolidation plan which DHS believes includes the needs 
assessment and gap analysis envisioned by GAO. In addition, DHS stated 
that the cost-benefit analysis of leasing versus construction 
completed during development of the original project master plan has 
been updated to reflect current conditions and included as part of 
this draft plan. GSA reported that it is working closely with DHS and 
will share this plan with stakeholders upon completion. 

* DHS and GSA concurred with our second recommendation that DHS and 
GSA develop revised cost and schedules that conform to GSA guidance 
and leading practices. DHS commented that a revised programmatic 
schedule and estimate was created in conjunction with development of 
the draft enhanced plan, which, according to DHS, is currently with 
the Office of Management and Budget for approval. DHS stated that it 
defers to GSA as to whether this estimate conforms to GSA or other 
criteria for cost and schedule estimation, since the project is being 
managed and executed by GSA and not DHS. GSA commented that it plans 
to update the cost and schedule estimates upon completion of the 
Enhanced Plan, and may adopt some of the leading practices referenced 
by GAO. 

* DHS concurred with our third recommendation that DHS designate the 
headquarters consolidation program a major acquisition and apply DHS 
acquisition policy requirements. DHS reported that the Acting Under 
Secretary for Management determined in September 2014 that the DHS-
funded portions of the St. Elizabeths project will come under the 
purview of the DHS Acquisition Review Board for oversight effective 
immediately to assure senior leadership visibility over DHS funds 
executed by GSA. DHS also requested that we consider this 
recommendation resolved and closed. Designating the DHS-funded 
portions of the St. Elizabeths project a major acquisition partially 
addresses our recommendation. It is still too early to assess the 
extent to which DHS is applying its acquisition policy to the project. 
As stated in our report, the St. Elizabeths headquarters consolidation 
project has been moved off and on the DHS master acquisition oversight 
list in prior years and in the years that it has been on the list, the 
project did not comply with major acquisition requirements as outlined 
by DHS guidelines. We will continue to monitor DHS's actions to apply 
its acquisition policy to the project as part of our normal 
recommendation follow-up process. 

In its comments, DHS also expressed concern that our report did not 
sufficiently describe the roles and responsibilities of DHS and GSA. 
Specifically, DHS stated that, as a tenant agency, its role is to 
establish programmatic requirements; budget for and fund tenant 
responsible items; provide oversight on GSA's use of DHS funds; 
validate that GSA managed design and construction activities meet DHS 
operational and program requirements; and coordinate with GSA and 
other stakeholders throughout the process, as appropriate. DHS also 
noted that other activities are managed by GSA in accordance with GSA 
policies and under GSA supervision and oversight. DHS stated that, 
while DHS cooperates with GSA and helps facilitate completion of these 
activities as appropriate, DHS does not have any supervisory control 
over the activities. Specifically, DHS stated that it did not select 
the St. Elizabeths site, nor does not award or manage contracts for 
design and construction. We agree that GSA has responsibility for 
these activities and have added more detailed discussion of DHS and 
GSA roles to the report. However, cooperation and collaboration 
between DHS and GSA is essential for a variety of reasons, including 
the overall cost, scope, and visibility of the project; the overall 
importance of the project in the context of DHS's mission; and in 
light of the fact that DHS has received $494.8 million to date for the 
project. This does not include the additional $1.2 billion that DHS 
expects that it will need to ensure that the project is completed by 
2026. In this context, we believe that the management and 
implementation of the St. Elizabeths project is a shared 
responsibility between DHS and GSA, requiring them to work closely 
together to help provide greater assurance to decision makers in 
Congress, DHS, and GSA--as well as taxpayers--that the project is 
being appropriately managed and acquired on-time and on-budget. 

DHS also expressed concern that the report is overly focused on 
"leading practices" as opposed to being more outcome and results 
oriented. We believe that applying the leading practice cited in our 
draft report would better position DHS and GSA to manage the St. 
Elizabeths' project and help ensure better outcomes and results. DHS 
stated that GSA, in concert with DHS, has already conducted sufficient 
analysis to support the best practices in our report. We disagree. As 
we note in the report, cost and schedule estimates for the project 
were deficient in several areas, including comprehensiveness, 
accuracy, and credibility. Estimates also failed to comply with GSA's 
internal guidance for cost and schedule. 

In its written response, GSA also commented that several of the 
leading practices GAO identifies are better suited to non-real estate 
investments such as weapons systems, spacecraft, aircraft carriers, 
and software systems. We disagree. As stated in our report, we have 
applied our leading cost and schedule estimation practices in past 
work involving federal construction projects, and the leading 
practices were developed in conjunction with numerous stakeholders 
from government and the private sector, including DHS and 
GSA.[Footnote 46] Furthermore, GSA acknowledged the value of our 
leading cost estimation practices in 2007 and issued an order to apply 
the principles to all cost estimates prepared in every GSA project, 
process, or organization.[Footnote 47] 

We are sending copies to the Secretary of Homeland Security, 
Administrator of GSA, and other interested parties. In addition, the 
report will be available at no charge on the GAO website at 
[hyperlink, http://www.gao.gov]. 

If you or your staffs have questions about this report, please contact 
either David Maurer at (202) 512-9627 or maurerd@gao.gov, or David 
Wise at (202) 512-2834 or wised@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. Key contributors to this report are 
listed in appendix IX. 

Signed by: 

David C. Maurer: 
Director: 
Homeland Security and Justice Issues: 

Signed by: 

David J. Wise: 
Director: 
Physical Infrastructure Issues: 

List of Requesters: 

The Honorable Thomas R. Carper: 
Chairman: 
The Honorable Tom A. Coburn, M.D. 
Ranking Member: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Michael T. McCaul: 
Chairman: 
Committee on Homeland Security: 
House of Representatives: 

The Honorable Jeff Duncan: 
Chairman: 
Subcommittee on Oversight and Management Efficiency: 
Committee on Homeland Security: 
House of Representatives: 

The Honorable Richard Hudson: 
Chairman: 
Subcommittee on Transportation Security: 
Committee on Homeland Security: 
House of Representatives: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

We conducted our review to examine (1) the extent to which the 
Department of Homeland Security (DHS) and the General Services 
Administration (GSA) developed DHS headquarters consolidation plans in 
accordance with leading capital decision-making principles, and (2) 
the extent to which DHS and GSA have estimated the costs and schedules 
of the DHS headquarters consolidation project at St. Elizabeths in a 
manner that is consistent with leading practices. 

To determine the extent to which DHS and GSA developed DHS 
headquarters consolidation plans in accordance with leading capital 
decision-making principles, we reviewed and analyzed DHS and GSA 
capital planning documents and interviewed DHS and GSA officials 
responsible for the planning and management of the St. Elizabeths 
project, as well as DHS and GSA senior leadership. We compared DHS and 
GSA capital planning actions against Office of Management and Budget 
(OMB) and GAO leading practices (see appendix II).[Footnote 48] Our 
analysis of DHS and GSA efforts using criteria for leading capital 
decision-making focused on planning for the remaining segments or 
phases of the project because, as we stated in previous reports, the 
planning phase is the crux of the capital decision-making process. 
[Footnote 49] The results from this phase are used throughout the 
remaining phases of the process; therefore, if key practices during 
this phase are not followed there may be repercussions on agency 
operations if poor capital investment decisions are made. To determine 
the extent to which DHS planned and implemented the DHS headquarters 
consolidation project at St. Elizabeths in accordance with 
departmental acquisition guidelines, we interviewed officials from 
DHS's Office of Program Accountability and Risk Management (PARM) as 
well as DHS project managers. We reviewed and analyzed DHS Acquisition 
Management Directive 102-01 (MD 102) and DHS's Major Acquisitions 
Oversight List for fiscal years 2010 through 2014. We then compared 
the acquisition standards detailed in MD 102 with DHS's efforts to 
acquire a consolidated headquarters facility at the GSA-owned St. 
Elizabeths Campus. 

To determine the extent to which DHS and GSA have estimated the costs 
and schedules of the DHS headquarters consolidation project at St. 
Elizabeths in a manner that is consistent with leading practices, we 
interviewed DHS and GSA program officials and compared DHS and GSA 
overall project cost and schedule estimates with GAO leading 
practices. Specifically, the GAO Cost Estimating and Assessment Guide 
(Cost Guide) identifies leading practices that represent work across 
the federal government and are the basis for a high-quality, reliable 
cost estimate.[Footnote 50] A cost estimate created using the leading 
practices exhibits four broad characteristics: it is accurate, well 
documented, credible, and comprehensive. That is, each characteristic 
is associated with a specific set of leading practices. In turn, each 
leading practice is made up of a number of specific tasks (see 
appendix III). Similarly, we compared DHS and GSA overall schedule 
estimates with the GAO Schedule Assessment Guide, which defines 
leading practices related to four characteristics--comprehensive, well 
constructed, credible, and controlled--that are important to 
developing high-quality, reliable schedule estimates (see appendix 
IV).[Footnote 51] For our evaluations of the cost and schedule 
estimates, when the tasks associated with the leading practices that 
define a characteristic were mostly or completely satisfied, we 
considered the characteristic to be substantially or fully met. When 
all four characteristics were at least substantially met, we 
considered a cost or schedule estimate to be reliable.[Footnote 52] To 
analyze the St. Elizabeths schedule estimate, we asked DHS and GSA to 
provide the most recent Integrated Master Schedule (IMS) that included 
all related embedded project schedules. Although the 2013 cost 
estimate provided by DHS and GSA was complete, the 2013 schedule 
estimate did not cover the entire consolidation project in sufficient 
detail. As a result, we initially analyzed the most recent complete 
schedule available, which was created in 2008. The 2008 schedule 
estimate listed project completion in 2016. Subsequently, at the 
request of GSA, we also applied our leading practices criteria to the 
incomplete 2013 schedule. We shared our analysis with DHS and GSA 
officials to review, comment on, and provide additional information, 
and we adjusted our analysis where appropriate. Finally, we reviewed 
GSA guidance that DHS and GSA officials stated was relevant to cost 
and schedule estimating for the St. Elizabeths project: P-120: Project 
Estimating Requirements for the Public Buildings Service (PBS); P-100: 
Facilities Standards for the Public Buildings Service; and GSA's 
Global Project Management (gPM) guidance, which includes the PBS 
Scheduling Fundamentals Guide. In areas where GSA estimating guidance 
aligned with our leading cost and schedule-estimating leading 
practices, we evaluated the extent to which the St. Elizabeths cost 
and schedule estimates conformed with GSA guidance. 

We conducted our work from August 2013 to September 2014 in accordance 
with generally accepted government auditing standards. Those standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings 
and conclusions based on our audit objectives. We believe that the 
evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. 

[End of section] 

Appendix II: Leading Practices in Capital Decision-Making: 

Congress, the Office of Management and Budget (OMB), and GAO have all 
identified the need for effective capital planning among federal 
agencies. GAO developed its Executive Guide: Leading Practices in 
Capital Decision-Making, which provides guidance to federal agencies 
on planning, budgeting, acquiring, and managing capital assets. 
[Footnote 53] Figure 8 illustrates how capital decision-making 
principles fit together. 

Figure 8: Leading Practices in Capital Decision-Making: 

[Refer to PDF for image: list] 

Principle: I. Integrate organizational goals into the capital decision-
making process; 
Practices: 
1. Conduct comprehensive assessment of needs to meet results-oriented 
goals and objectives; 
2. Identify current capabilities, including the use of an inventory of 
assets and their condition, and determine if there is a gap between 
current and needed capabilities; 
3. Decide how best to meet the gap by identifying and evaluating 
alternative approaches (including noncapital approaches). 

Principle: II. Evaluate and select capital assets using an investment 
approach; 
Practices: 
4. Establish review and approval framework supported by analyses; 
5. Rank and select projects based on established criteria; 
6. Develop a long-term capital plan that defines capital asset 
decisions. 

Principle: III. Balance budgetary control and managerial flexibility 
when funding capital projects; 
Practices: 
7. Budget for projects in useful segments; 
8. Consider innovative approaches to full up-front funding. 

Principle: IV. Use project management techniques to optimize project 
success; 
Practices: 
9. Monitor project performance and establish incentives for 
accountability; 
10. Use cross-functional teams to plan for and manage projects. 

Principle: V. Evaluate results and incorporate lessons learned into 
the decision-making process; 
Practices: 
11. Evaluate results to determine if organization-wide goals have been 
met; 
12. Evaluate the decision-making process: reappraise and update to 
ensure that goals are met. 

Source: GAO. GAO-14-648. 

[End of figure] 

[End of section] 

Appendix III: The Leading Practices for Developing High-Quality Cost 
Estimates: 

We developed the GAO Cost Estimating and Assessment Guide in order to 
establish a consistent methodology that is based on best practices and 
that can be used across the federal government for developing, 
managing, and evaluating capital program cost estimates. We have 
identified 12 steps under 4 characteristics that, followed correctly, 
should result in reliable and valid cost estimates that management can 
use for making informed decisions. 

Table 9: The Characteristics of a High-Quality Cost Estimate, Mapped 
to the 12 Steps of High-Quality Cost Estimating: 

Well documented: 

Cost estimate characteristic: The estimate is thoroughly documented, 
including source data and significance, clearly detailed calculations 
and results, and explanations for choosing a particular method or 
reference; 
* Data are traced back to the source documentation; 
* Includes a technical baseline description; 
* Documents all steps in developing the estimate so that a cost 
analyst unfamiliar with the program can recreate it quickly with the 
same result; 
* Documents all data sources for how the data were normalized; 
* Describes in detail the estimating methodology and rationale used to 
derive each Work Breakdown Structure (WBS) element's cost; 
Cost estimating step: 
1. Define the estimate's purpose; 
3. Define the program; 
5. Identify ground rules and assumptions; 
6. Obtain the data; 
10.Document the estimate; 
11.Present the estimate to management. 

Comprehensive: 

Cost estimate characteristic: The estimate's level of detail ensures 
that cost elements are neither omitted nor double counted; 
* Details all cost-influencing ground rules and assumptions; 
* Defines the WBS and describes each element in a WBS dictionary; 
* A major automated information system program may have only a cost 
element structure; 
Cost estimating step: 
2. Develop the estimating plan; 
4. Determine the estimating approach. 

Accurate: 

Cost estimate characteristic: The estimate is unbiased, not overly 
conservative or overly optimistic, and based on an assessment of most 
likely costs; 
* It has few, if any, mathematical mistakes; its mistakes are minor; 
* It has been validated for errors like double counting and omitted 
costs; 
* * Cost drivers have been cross-checked to see if results are similar; 
* It is timely; 
* It is updated to reflect changes in technical or program assumptions 
and new phases or milestones; 
* Estimates are replaced with Earned Value Management[A] (EVM) estimate 
at completion[B] (EAC) and the independent EAC from the integrated EVM 
system; 
Cost estimating step: 
7. Develop the point estimate and compare it to an independent cost 
estimate; 
12. Update the estimate to reflect actual costs and changes. 

Credible: 

Cost estimate characteristic: Discusses any limitations of the analysis 
from uncertainty or biases surrounding data or assumptions; 
* Major assumptions are varied and other outcomes recomputed to 
determine their sensitivity to changes in assumptions; 
* Risk and uncertainty analysis is performed to determine the level of 
risk associated with the estimate; 
* An independent cost estimate is developed to determine if other 
estimating methods produce similar results; 
Cost estimating step: 
7. Develop the point estimate and compare it to an independent cost 
estimate; 
8. Conduct sensitivity analysis; 
9. Conduct risk and uncertainty analysis. 

Source: GAO. GAO-14-648. 

[A] EVM is a project management tool that integrates the technical 
scope of work with schedule and cost elements for investment planning 
and control. It compares the value of work accomplished in a given 
period with the value of the work expected in that period. Differences 
in expectations are measured in both cost and schedule variances. 

[B] An EAC is an independent assessment of the cost to complete 
authorized work based on a contractor's historical EVM performance. It 
uses various EVM metrics to forecast the expected final cost. 

[End of table] 

[End of section] 

Appendix IV: 10 Leading Practices for Developing High-Quality Schedule 
Estimates: 

The GAO Schedule Assessment Guide is a companion to the Cost Guide. A 
consistent methodology for developing, managing, and evaluating 
capital program cost estimates includes the concept of scheduling the 
necessary work to a timeline, as discussed in the Cost Guide. A well-
planned schedule is a fundamental management tool that can help 
government programs use public funds effectively by specifying when 
work will be performed in the future and measuring program performance 
against an approved plan. Table 10 represents the 10 leading practices 
associated with a high-quality and reliable schedule and their 
concepts. 

Table 10: 10 Leading Practices for Developing High-Quality Schedule 
Estimates: 

Leading practice: Capturing all activities; 
Explanation: The schedule should reflect the resources (labor, 
materials, and overhead) needed to do the work, whether they will be 
available when needed, and any funding or time constraints. 

Leading practice: Sequencing all activities; 
Explanation: The schedule should be planned so that critical project 
dates can be met. To do this, activities need to be logically 
sequenced--that is, listed in the order in which they are to be 
carried out. In particular, activities that must be completed before 
other activities can begin (predecessor activities), as well as 
activities that cannot begin until other activities are completed 
(successor activities), should be identified. Date constraints and 
lags should be minimized and justified. This helps ensure that the 
interdependence of activities that collectively lead to the completion 
of events or milestones can be established and used to guide work and 
measure progress. 

Leading practice: Assigning resources to all activities; 
Explanation: The schedule should reflect the resources (labor, 
materials, and overhead) needed to do the work, whether they will be 
available when needed, and any funding or time constraints. 

Leading practice: Establishing the duration of all activities; 
Explanation: The schedule should realistically reflect how long each 
activity will take. When the duration of each activity is determined, 
the same rationale, historical data, and assumptions used for cost 
estimating should be used. Durations should be reasonably short and 
meaningful and allow for discrete progress measurement. Schedules that 
contain planning and summary planning packages as activities will 
normally reflect longer durations until broken into work packages or 
specific activities. 

Leading practice: Verifying that the schedule can be traced 
horizontally and vertically; 
Explanation: The detailed schedule should be horizontally traceable, 
meaning that it should link products and outcomes associated with 
other sequenced activities. These links are commonly referred to as 
handoffs and serve to verify that activities are arranged in the right 
order for achieving aggregated products or outcomes. The integrated 
master schedule (IMS) should also be vertically traceable--that is, 
varying levels of activities and supporting subactivities can be 
traced. Such mapping or alignment of levels enables different groups 
to work to the same master schedule. 

Leading practice: Confirming that the critical path is valid; 
Explanation: The schedule should identify the program critical path--
the path of longest duration through the sequence of activities. 
Establishing a valid critical path is necessary for examining the 
effects of any activity's slipping along this path. The program 
critical path determines the program's earliest completion date and 
focuses the team's energy and management's attention on the activities 
that will lead to the project's success. 

Leading practice: Ensuring reasonable total float; 
Explanation: The schedule should identify reasonable float (or slack)--
the amount of time by which a predecessor activity can slip before the 
delay affects the program's estimated finish date--so that the 
schedule's flexibility can be determined. Large total float on an 
activity or path indicates that the activity or path can be delayed 
without jeopardizing the finish date. The length of delay that can be 
accommodated without the finish date's slipping depends on a variety 
of factors, including the number of date constraints within the 
schedule and the amount of uncertainty in the duration estimates, but 
the activity's total float provides a reasonable estimate of this 
value. As a general rule, activities along the critical path have the 
least float. 

Leading practice: Conducting a schedule risk analysis; 
Explanation: A schedule risk analysis uses a good critical path method 
(CPM) schedule and data about project schedule risks and opportunities 
as well as statistical simulation to predict the level of confidence 
in meeting a program's completion date, determine the time contingency 
needed for a level of confidence, and identify high-priority risks and 
opportunities. As a result, the baseline schedule should include a 
buffer or reserve of extra time. 

Leading practice: Updating the schedule using actual progress and 
logic; 
Explanation: Progress updates and logic provide a realistic forecast 
of start and completion dates for program activities. Maintaining the 
integrity of the schedule logic at regular intervals is necessary to 
reflect the true status of the program. To ensure that the schedule is 
properly updated, people responsible for the updating should be 
trained in critical path method scheduling. 

Leading practice: Maintaining a baseline schedule; 
Explanation: A baseline schedule is the basis for managing the project 
scope, the time period for accomplishing it, and the required 
resources. The baseline schedule is designated the target schedule, 
subject to a configuration management control process, against which 
project performance can be measured, monitored, and reported. The 
schedule should be continually monitored so as to reveal when 
forecasted completion dates differ from planned dates and whether 
schedule variances will affect downstream work. A corresponding 
baseline document explains the overall approach to the project; 
defines custom fields in the schedule file; details ground rules and 
assumptions used in developing the schedule; and justifies 
constraints, lags, long activity durations, and any other unique 
features of the schedule. 

Source: GAO. GAO-14-648. 

[End of table] 

[End of section] 

Appendix V: Summary Assessment of St. Elizabeths 2013 Cost Estimate 
Compared with Leading Practices: 

We assessed the Department of Homeland Security (DHS) and General 
Services Administration (GSA) cost estimate using the framework of the 
four characteristics--comprehensive, well documented, accurate, and 
credible--associated with high-quality, reliable cost estimates. Table 
11 provides greater detail on our comparison of the estimate with 
leading practices that constitute the four cost-estimating 
characteristics. 

Table 11: Summary Assessment of St. Elizabeths 2013 Cost Estimate 
Compared with Leading Practices: 

Characteristic: Comprehensive; 
Overall assessment: Partially meets; 

Leading practice: The cost estimate includes all life-cycle costs; 
Individual assessment: Partially meets. 

Leading practice: The cost estimate completely defines the program, 
reflects the current schedule, and is technically reasonable; 
Individual assessment: Partially meets. 

Leading practice: The cost estimate is product-oriented, traceable to 
the statement of work/objective, and at an appropriate level of detail 
to ensure that cost elements are neither omitted nor double-counted; 
Individual assessment: Partially meets. 

Leading practice: The estimate documents all cost-influencing ground 
rules and assumptions; 
Individual assessment: Partially meets. 

Characteristic: Well documented; 
Overall assessment: Partially meets; 

Leading practice: The documentation should capture the source data 
used, the reliability of the data, and how the data were normalized; 
Individual assessment: Partially meets. 

Leading practice: The documentation describes in sufficient detail the 
calculations performed and the estimating methodology used to derive 
each element's cost; 
Individual assessment: Partially meets. 

Leading practice: The documentation describes step by step how the 
estimate was developed so that a cost analyst unfamiliar with the 
program could understand what was done and replicate it; 
Individual assessment: Minimally meets. 

Leading practice: The documentation discusses the technical baseline 
description and the data in the baseline are consistent with the 
estimate; 
Individual assessment: Substantially meets. 

Leading practice: The documentation provides evidence that the cost 
estimate was reviewed and accepted by management; 
Individual assessment: Minimally meets. 

Characteristic: Accurate; 
Overall assessment: Minimally meets; 

Leading practice: The cost estimate results are unbiased, not overly 
conservative or optimistic and based on an assessment of most likely 
costs; 
Individual assessment: Minimally meets. 

Leading practice: The estimate has been adjusted properly for 
inflation; 
Individual assessment: Partially meets. 

Leading practice: The estimate contains few, if any, minor mistakes; 
Individual assessment: Partially meets. 

Leading practice: The cost estimate is regularly updated to reflect 
significant changes in the program so that it is always reflecting 
current status; 
Individual assessment: Minimally meets. 

Leading practice: Variances between planned and actual costs are 
documented, explained, and reviewed; 
Individual assessment: Minimally meets. 

Leading practice: The estimate is based on a historical record of cost 
estimating and actual experiences from other comparable programs; 
Individual assessment: Minimally meets. 

Leading practice: The estimating technique for each cost element was 
used appropriately; 
Individual assessment: Partially meets. 

Characteristic: Credible; 
Overall assessment: Minimally meets. 

Leading practice: The cost estimate includes a sensitivity analysis 
that identifies a range of possible costs based on varying major 
assumptions, parameters, and data inputs; 
Individual assessment: Does not meet. 

Leading practice: A risk and uncertainty analysis was conducted that 
quantified the imperfectly understood risks and identified the effects 
of changing key cost driver assumptions and factors; 
Individual assessment: Minimally meets. 

Leading practice: Major cost elements were crossed checked to see 
whether results were similar; 
Individual assessment: Minimally meets. 

Leading practice: An independent cost estimate was conducted by a 
group outside the acquiring organization to determine whether other 
estimating methods produce similar results; 
Individual assessment: Does not meet. 

Fully meets: DHS/GSA provided complete evidence that satisfies the 
entire criterion: 

Substantially meets: DHS/GSA provided evidence that satisfies a large 
portion of the criterion: 

Partially meets: DHS/GSA provided evidence that satisfies about 
half of the criterion: 

Minimally meets: DHS/GSA provided evidence that satisfies a small 
portion of the criterion: 

Does not meet: DHS/GSA provided no evidence that satisfies any of 
the criterion: 

Source: GAO analysis of Department of Homeland Security and General 
Services Administration cost data. GAO-14-648. 

[End of table] 

[End of section] 

Appendix VI: Summary Assessment of St. Elizabeths 2008 and 2013 
Schedule Estimates Compared with Leading Practices: 

We assessed Department of Homeland Security (DHS) and General Services 
Administration (GSA) schedule estimates using the framework of the 
four characteristics--comprehensive, well constructed, credible, and 
controlled--associated with high-quality, reliable schedule estimates. 
Table 12 provides greater detail on our comparison of both the 2008 
and 2013 estimates with 10 specific leading practices that constitute 
the four schedule estimating characteristics. 

Table 12: Summary Assessment of St. Elizabeths 2008 and 2013 Schedule 
Estimates Compared with Leading Practices: 

Characteristic: Comprehensive; 
Overall assessment: 
2008 schedule: Minimally meets. 
2013 schedule: Minimally meets. 

Leading practice: Capturing all activities; 
Individual assessment: 
2008 schedule: Minimally meets; 
2013 schedule: Minimally meets. 

Leading practice: Assigning resources to all activities; 
Individual assessment: 
2008 schedule: Does not meet; 
2013 schedule: Does not meet. 

Leading practice: Establishing the duration of all activities; 
Individual assessment: 
2008 schedule: Partially meets; 
2013 schedule: Partially meets. 

Characteristic: Well constructed; 
Overall assessment: 
Individual assessment: 
2008 schedule: Minimally meets; 
2013 schedule: Does not meet. 

Leading practice: Sequencing all activities; 
Individual assessment: 
2008 schedule: Partially meets; 
2013 schedule: Does not meet. 

Leading practice: Confirming that the critical path is valid; 
Individual assessment: 
2008 schedule: Minimally meets; 
2013 schedule: Does not meet. 

Leading practice: Ensuring reasonable total float; 
Individual assessment: 
2008 schedule: Minimally meets; 
2013 schedule: Does not meet. 

Characteristic: Credible; 
Overall assessment: 
2008 schedule: Minimally meets; 
2013 schedule: Minimally meets. 

Leading practice: 
Verifying that the schedule is traceable horizontally and vertically; 
Individual assessment: 
2008 schedule: Does not meet; 
2013 schedule: Does not meet. 

Characteristic: Controlled; 
Overall assessment: 
2008 schedule: Minimally meets; 
2013 schedule: Minimally meets. 

Leading practice: Updating the schedule with actual progress and logic; 
Individual assessment: 
2008 schedule: Minimally meets; 
2013 schedule: Minimally meets. 

Leading practice: Leading practice: Maintaining a baseline schedule; 
Individual assessment: 
2008 schedule: Does not meet; 
2013 schedule: Minimally meets. 

Fully meets: DHS/GSA provided complete evidence that satisfies the 
entire criterion: 

Substantially meets: DHS/GSA provided evidence that satisfies a large 
portion of the criterion: 

Partially meets: DHS/GSA provided evidence that satisfies about 
half of the criterion: 

Minimally meets: DHS/GSA provided evidence that satisfies a small 
portion of the criterion: 

Does not meet: DHS/GSA provided no evidence that satisfies any of 
the criterion: 

Source: GAO analysis of Department of Homeland Security and General 
Services Administration schedule data. | GAO-14-648. 

[End of table] 

[End of section] 

Appendix VII: Comments from the Department of Homeland Security: 

U.S. Department of Homeland Security: 
Washington, DC 20528: 

September 12, 2014: 

Mr. David Maurer: 
Director, Homeland Security and Justice Issues: 
Mr. David J. Wise: 
Director, Physical Infrastructure Issues: 
U.S. Government Accountability Office: 
441 G. Street NW: 
Washington, DC 20548: 

Re: Draft Report GAO-14-648, "Federal Real Property: DHS and GSA Need to
Strengthen the Management of DHS Headquarters Consolidation" 

Dear Messrs. Maurer and Wise: 

Thank you for the opportunity to review and comment on this draft 
report. The Department of Homeland Security (DHS) appreciates the 
Government Accountability Office's (GAO) work in planning and 
conducting its review and issuing this report. 

As GAO notes, several factors have changed since DHS began planning 
its consolidated headquarters in 2005, and that the project has not 
received the level of funding that DHS and General Services 
Administration (GSA) officials originally requested. The Department is
concerned that the report does not sufficiently describe the different 
roles and responsibilities between GSA and DHS in the planning and 
execution of the headquarters consolidation project. In short, GSA 
serves as the broker/property manager and DHS is the tenant. This 
distinction in agency roles is critical to avoiding possible 
misunderstandings concerning which agency is the most appropriate one 
to address the recommendations in this report. 

As a tenant agency, DHS's role is to establish programmatic 
requirements; budget for and fund tenant responsible items; provide 
oversight on GSA's use of DHS funds; validate that GSA-managed design 
and construction activities meet DHS operational and program 
requirements; and, coordinate with GSA and other stakeholders 
throughout the process, as appropriate. DHS does not make any housing 
decisions; did not select the St. Elizabeths site; and does not award 
or manage any contracts for design or construction, infrastructure 
development, outfitting, or move planning/execution. All of these 
activities are managed by GSA in accordance with GSA policies and 
under GSA supervision and oversight. While DHS cooperates with GSA and 
helps facilitate completion of these activities, as appropriate, DHS 
does not have any supervisory control over the activities. 

The Department is also concerned that the report seems overly focused 
on "leading practices" as opposed to being more outcome- and results-
oriented. DHS agrees that enhancements related to project estimating 
and scheduling practices are possible, although we believe GSA, in 
concert with DHS, has already conducted sufficient analysis to support 
the practices identified in this document. It is just as important to 
note that GSA and DHS successfully delivered the Douglas A. Mumo Coast 
Guard Headquarters Building on-time and within budget for the portions 
of the project funded by the Congress. 

Effective capital planning requires sound, sustainable and reliable 
capital budgeting programs for GSA and executive agencies. The fact 
that this project has not received the level of funding that GSA and 
DHS originally requested by the Administration cannot be 
overemphasized. 

Regardless of whether the St. Elizabeths campus is built out as 
originally envisioned, DHS must proceed with headquarters 
consolidation within the National Capitol Region. Approximately 70
percent of DHS and Component Headquarters occupancies in various 
commercial leased facilities will expire between FY 2016-2020. These 
leases must be re-competed. These are not discretionary investments, 
but rather "must pay" requirements. Of note, GAO has previously
acknowledged the long-term cost-benefits to agencies in shifting high-
value (prospectus level) commercial leases to federal space. [Footnote 
1] 

While we are disappointed with much of the context and perspective 
presented in this report, it contains three recommendations, with 
which the Department concurs. Specifically, GAO recommended that: 

Recommendation 1: The Secretary of Homeland Security and the 
Administrator of GSA work jointly to conduct the following assessments 
and use the results to inform updated DHS headquarters consolidation 
plans: 

* a comprehensive needs assessment and gap analysis of current and 
needed capabilities that take into consideration changing conditions, 
and; 

* an alternatives analysis that identifies the costs and benefits of 
leasing and construction altematives for the remainder of the project 
and prioritizes options to account for funding instability. 

Response: Concur. GSA and DHS have already completed a draft enhanced 
consolidation plan which DHS believes includes the needs assessment 
and gap analysis envisioned by GAO. In addition, the cost-benefit 
analysis of leasing versus construction completed during development of
the original project master plan has been updated to reflect current 
conditions and included as part of this plan. The draft enhanced 
consolidation plan is pending Office of Management and Budget (OMB) 
clearance and, until cleared, it remains a pre-decisional and 
deliberative document that cannot be shared with GAO. We anticipate 
that OMB will clear the plan sometime on or before submission of the 
President's FY 2016 Budget to Congress. Estimated Completion Date (ECD):
February 27, 2015. 

Recommendation 2: After revising the DHS headquarters consolidation 
plans, the Secretary of Homeland Security and the Administrator of GSA 
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 independent evaluation of the estimates. 

Response: Concur. A revised programmatic schedule and estimate was 
created in conjunction with development of the enhanced coordination 
plan. DHS defers to GSA as to whether this estimate conforms to GSA or 
other criteria for cost and schedule estimation, since the project is
being managed and executed by GSA and not DHS. In addition, DHS defers 
to GSA regarding the accomplishment of any independent evaluation of 
the estimate, again because the project is being managed and executed 
by GSA and not DHS. ECD: To be determined by GSA. 

Recommendation 3: The Secretary of Homeland Security designate the 
headquarters consolidation program a major acquisition, consistent 
with DHS acquisition policy, and apply DHS acquisition policy 
requirements. 

Response: Concur. This project is being managed by GSA in accordance 
with GSA acquisition policies and under GSA supervision and oversight; 
the full project is not governed by DHS. However, the Acting Under 
Secretary for Management has determined that the DHS-funded portions 
of the St. Elizabeths project will come under the purview of the DHS 
Acquisition Review Board for oversight effective immediately to assure 
senior leadership visibility over DHS funds executed by GSA. We 
request that GAO consider this recommendation resolved and closed. 

Again, thank you for the opportunity to review and provide comments on 
this draft report. Technical comments were previously provided under 
separate cover. Please feel free to contact me if you have any 
questions. We look forward to working with you in the future. 

Sincerely, 

Signed by: 

Jim H. Crumpacker: 
Director: 
Departmental GAO-OIG Liaison Office: 

Comment letter footnote: 

[1] See GAO, "Federal Real Property: Greater Transparency and 
Strategic Focus Needed for High-Value GSA Leases," [hyperlink, 
http://www.gao.gov/products/GAO-13-744] (Washington, D.C.: September 
2013), pages 25 and 34. 

[End of section] 

Appendix VIII: Comments from General Services Administration: 

GSA: 
The Administrator: 
1800 F Street, NW: 
Washington, DC 20405-0002: 
[hyperlink, http://www.gsa.gov]: 

September 9, 2014: 

The Honorable Gene L. Dodaro: 
Comptroller General of the United States: 
U.S. Government Accountability Office: 
Washington, DC 20548: 

Dear Mr. Dodaro: 

The U.S. General Services Administration (GSA) appreciates the 
opportunity to review and comment on the draft report, "Federal Real 
Property: DHS and GSA Need to Strengthen the Management of DHS 
Headquarters Consolidation" (GAO-14-648). The DHS consolidation 
represents a unique opportunity to reduce future real estate costs,
enhance mission effectiveness through co-location, and redevelop an 
underutilized asset already in the Federal portfolio. GSA successfully 
delivered Phase 1, the Douglas A. Munro Coast Guard Headquarters 
Building, and I anticipate an on-time and on-budget delivery of the 
next phase of St. Elizabeth's, a $155 million investment to upgrade 
the historic Center Building. 

As GAO has noted many times, the uncertainty in funding and limited 
access to the Federal Buildings Fund creates a serious challenge for 
the management of real property.[Footnote 1] In the case of St. 
Elizabeth's, piecemeal funding of project phases has extended the 
schedule and reduced opportunities for cost savings through sharing
resources and infrastructure among phases. GSA supports previous 
recommendations by GAO for Congress to develop alternative budget 
structures that allow for greater consistency in funding and project 
planning, and until Congress restores GSA's full and consistent access 
to the Federal Buildings Fund, the Government will continue to see
cost increases and schedule delays for long-term, multi-phase 
construction projects. 

GSA agrees with GAO's recommendation to conduct a "comprehensive needs
assessment and gap analysis of current and needed capabilities that 
take into consideration changing conditions, and 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." As stated in 
the report, I have already begun this assessment and will include an 
alternatives analysis that further improves efficiency and savings. 
The St. Elizabeth's Consolidation Enhanced Plan will not only improve 
processes but reduce costs by decreasing the overall footprint, 
reexamining original project requirements, and integrating the 
efficient use of leased space based on a review of DHS leases 
throughout the National Capital Region. GSA and DHS are working 
closely together and will share this plan with stakeholders upon
completion. 

Finally, I also agree with the recommendation 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." GSA plans to update these estimates upon completion of the 
Enhanced Plan, and may adopt some of the leading practices referenced 
by GAO. Several of the leading practices GAO identifies are better 
suited to non-real estate investments such as weapons systems, 
spacecraft, aircraft carriers, and software systems. However, 
quantifying risk and uncertainty are important considerations for real 
property projects in an uncertain funding environment. GSA will use 
this leading practice in the St. Elizabeth's Enhanced Plan and include 
it in future revisions of GSA policies. 

GSA is developing specific actions in response to each of the 
recommendations. I am confident that these actions will satisfactorily 
remedy the concerns raised by GAO. If you have any additional 
questions or concerns, please do not hesitate to contact me at (202) 
501-0800, or Ms. Lisa Austin, Associate Administrator, Office of 
Congressional and Intergovernmental Affairs, at (202) 501-0563. 

Sincerely, 

Signed by: 

Dan Tangherlini: 

cc: David J. Wise, Director, Physical Infrastructures Issues, GAO
David C. Maurer, Director, Homeland Security and Justice Issues, GAO . 

Comment letter footnote: 

[1] "Capital Financing: Alternative Approaches to Budgeting for 
Federal Real Property" (GAO-14-239) and "Federal Buildings Fund: 
Improved Transparency and Long-term Plan Needed to Clarify Capital 
Funding Priorities" (GAO-12-646). 

[End of section] 

Appendix IX: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

David C. Maurer, Director, Homeland Security and Justice Issues, (202) 
512-9627 or maurerd@gao.gov: 

David J. Wise, Director, Physical Infrastructure Issues, (202) 512-
2834 or wised@gao.gov: 

Staff Acknowledgments: 

In addition to the contacts named above, John Mortin (Assistant 
Director), Karen Richey (Assistant Director), Juana Collymore, Giselle 
Cubillos, Daniel Hoy, Abishek Krupanand, Jennifer Leotta, and David 
Lutter made key contributions to this report. Also contributing to 
this report were Charles Bausell, Susan Hsu, Eric Hauswirth, Tracey 
King, Linda Miller, Jan Montgomery, and Cynthia Saunders. 

[End of section] 

Footnotes: 

[1] The St. Elizabeths campus is a National Historic Landmark and a 
former federally run hospital for the mentally ill. 

[2] The National Capital Region is composed of the District of 
Columbia and nearby jurisdictions in Maryland and Virginia. 

[3] GAO, High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-13-283] (Washington, D.C.: Feb. 14, 
2013). 

[4] [hyperlink, http://www.gao.gov/products/GAO-13-283]. 

[5] GAO, Homeland Security: DHS Requires More Disciplined Investment 
Management to Help Meet Mission Needs, [hyperlink, 
http://www.gao.gov/products/GAO-12-833] (Washington, D.C.: Sept. 18, 
2012). 

[6] GAO, Executive Guide: Leading Practices in Capital Decision-
Making, [hyperlink, http://www.gao.gov/products/GAO/AIMD-99-32] 
(Washington, D.C.: December 1998). To produce this guide, we conducted 
extensive research to identify leading practices in capital decision-
making used by state and local governments and private sector 
organizations. Specifically, on the basis of interviews and 
documentation obtained from site visits to leading organizations, we 
identified innovative practices used by individual organizations as 
well as approaches and elements that were common across organizations. 
The leading organizations in our study reviewed a draft of this guide 
and verified that the case study examples are an accurate 
representation of their practices. These practices are, in part, 
intended to provide a disciplined approach or process to help federal 
agencies effectively plan and procure assets to achieve the maximum 
return on investments. In the overall capital decision-making 
framework, planning is the first phase--and arguably the most 
important--since it drives the remaining phases of budget, 
procurement, and management. 

[7] Pub. L. No. 107-296, 116 Stat. 2135. 

[8] Departmental offices encompass core management and policy 
functions, among other things. The seven core DHS operating components 
headquartered in the NCR are U.S. Citizenship and Immigration 
Services, U.S. Coast Guard, U.S. Customs and Border Protection, 
Federal Emergency Management Agency, U.S. Immigration and Customs 
Enforcement, U.S. Secret Service, and Transportation Security 
Administration. 

[9] GSA provides related real estate services including the operation 
and maintenance of buildings and outleasing programs. 

[10] In part because of St. Elizabeths' status as a National Historic 
Landmark, federal laws require GSA to consult with relevant 
stakeholders. See 36 C.F.R. pt. 800. According to GSA, it is in 
ongoing consultation with the District of Columbia Historic 
Preservation Office and the Advisory Council on Historic Preservation. 
Also, the St. Elizabeths Master Plan was approved by the National 
Capital Planning Commission, and the Commission of Fine Arts. 

[11] Pub. L. No. 111-5, 123 Stat. 115. ARRA was an economic stimulus 
package that provided almost $800 billion in government-wide 
appropriations and revenue provisions. The act provided $200 million 
to DHS for headquarters consolidation, and the accompanying conference 
report provided that $450 million of the funding for the GSA Federal 
Buildings Fund was to go to the DHS headquarters consolidation 
project. Pub. L. No. 111-5, 123 Stat. at 162; H.R. Rep. No. 111-16, at 
432 (2009) (Conf. Rep.). 

[12] OMB, Capital Programming Guide, Supplement to OMB Circular A-11 
(Washington, D.C.: July 2014). 

[13] GAO, Executive Guide: Leading Practices in Capital Decision-
Making; [hyperlink, http://www.gao.gov/products/GAO/AIMD-99-32] 
(Washington, D.C.: December 1998). 

[14] [hyperlink, http://www.gao.gov/products/GAO/AIMD-99-32]. 

[15] See GAO, Federal Capital: Three Entities' Implementation of 
Capital Planning is Mixed, [hyperlink, 
http://www.gao.gov/products/GAO-07-274] (Washington, D.C.: Feb. 23, 
2007), and Budget Issues: Agency Implementation of Capital Planning 
Principles Is Mixed, [hyperlink, 
http://www.gao.gov/products/GAO-04-138] (Washington, D.C.: Jan. 16, 
2004). 

[16] One other practice related to the planning phase is to develop a 
long-term capital plan that defines capital asset decisions. We did 
not include this practice, as it is more applicable to DHS's overall 
capital asset planning process and broader portfolio management. 

[17] OMB, Capital Programming Guide, Supplement to OMB Circular A-11. 

[18] Telework is a work arrangement in which employees perform all or 
a portion of their work at an alternative worksite, such as from home 
or a telework center. According to GSA, facility managers have focused 
on ways to use work space more efficiently as a means to reduce 
overall space use costs by reducing the amount of space occupied. For 
example, since the early 2000s, typical work space needs have declined 
as a result of the widespread application of more efficient facility 
standards. See GSA, Workspace Utilization and Allocation Benchmark 
(Washington, D.C.: updated July 2012). 

[19] [hyperlink, http://www.gao.gov/products/GAO/AIMD-99-32]. 

[20] Presidential Memorandum: Disposing of Unneeded Federal Real 
Estate (Washington, D.C.: June 10, 2010). 

[21] OMB, OMB Memorandum 12-12: Promoting Efficient Spending to 
Support Agency Operations (Washington, D.C.: May 11, 2012). 

[22] The Center Building will house the Office of the Secretary of 
Homeland Security, among other things. 

[23] OMB, Capital Programming Guide, Supplement to OMB Circular A-11. 

[24] GAO, Federal Real Property: DHS Has Made Progress, but Additional 
Actions Are Needed to Address Real Property Management and Security 
Challenges, [hyperlink, http://www.gao.gov/products/GAO-07-658] 
(Washington, D.C.: June 22, 2007). In 2007, DHS stated that the 
colocation and consolidation benefits of the campus scenario were more 
favorable than those of the other scenarios and the estimated annual 
costs of the campus scenario were 10 to 15 percent lower than for the 
baseline scenario. 

[25] According to DHS and GSA, the Master Plan set the seat-to-staff 
ratio at 1 seat for every 1 person. That ratio was changed to 1 seat 
for approximately every 1.3 persons to help meet the Freeze the 
Footprint initiative in 2012. 

[26] For example, OMB's Capital Programming Guide states that agencies 
should request budget authority sufficient to complete a useful 
segment of a project (or the entire project, if it is not divisible 
into useful segments). Budgeting for projects in useful segments is 
also a GAO leading practice in capital decision-making during the 
budget phase of capital programming. 

[27] See related work at [hyperlink, 
http://www.gao.gov/products/GAO-12-833]. MD 102 was issued in 2008 and 
updated in 2010. It replaced Management Directive 1400, which had 
governed major acquisition programs since 2006. DHS originally 
established an investment review process in 2003 to provide 
departmental oversight of major investments throughout their life-
cycles, and to help ensure that funds allocated for investments 
through the budget process are well spent. 

[28] The four phases of the acquisition life-cycle are (1) needs 
phase, (2) analyze/select phase, (3) obtain phase, and (4) 
produce/deploy/support phase. 

[29] Key DHS acquisition documents requiring department level approval 
are the (1) mission need statement, (2) capability development plan, 
(3) operational requirements document, (4) acquisition plan, (5) 
integrated logistics support plan, (6) life-cycle cost estimate, (7) 
acquisition program baseline, and (8) test and evaluation master plan. 

[30] [hyperlink, http://www.gao.gov/products/GAO-12-833]. 

[31] DHS reviews its acquisition portfolio annually and designates 
programs as major acquisitions based on DHS investment thresholds. 
Generally, programs that incur costs greater than $300 million over 
the life-cycle of the program are considered major acquisitions. 

[32] In 2014, DHS changed the name of the Major Acquisition Oversight 
List to the Master Acquisition Oversight List to more accurately 
distinguish between the department's major (Level 1 and 2) and non-
major (Level 3) acquisitions and non-acquisition activities included 
in the list. 

[33] DHS OIG, Adherence to Acquisition Management Policies Will Help 
Reduce Risks to the Technology Integration Program, OIG-12-107 
(Washington, D.C.: Sept. 11, 2012). The OIG found that the IT portion 
of the consolidation project, called the Technology Integration 
Program (TIP) was a large and costly acquisition, valued at over $875 
million, that was critical to the establishment of a robust IT 
infrastructure at the St. Elizabeths Campus. The OIG stated that 
despite GSA's role in awarding and administering the IT contracts, TIP 
was a DHS IT project and no GSA funding was involved in TIP. Among 
other things, the OIG went on to say that without the proper reporting 
processes, DHS had little guarantee that TIP was properly progressing, 
or that its strategic goals would be reached, and that DHS lacked full 
understanding of any potential risks or the opportunity to evaluate or 
mitigate them. DHS concurred with the DHS OIG recommendation and 
placed the TIP program on the major acquisition list. 

[34] To analyze the schedule estimate, we asked DHS and GSA to provide 
the most recent Integrated Master Schedule (IMS) that included all 
related embedded project schedules. However, the 2013 schedule 
estimate provided by DHS and GSA did not cover the entire 
consolidation project in sufficient detail. As a result, we analyzed 
the most recent complete schedule available, which was created in 
2008. Subsequently, at the request of GSA, we also applied our leading 
practices criteria to the incomplete 2013 schedule. 

[35] GAO, GAO Cost Estimating and Assessment Guide: Best Practices for 
Developing and Managing Capital Program Costs, [hyperlink, 
http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.: Mar. 2, 
2009). The methodology outlined in this guide is a compilation of best 
practices that federal cost-estimating organizations and industry use 
to develop and maintain reliable cost estimates throughout the life of 
a government acquisition program. The leading practices were developed 
in conjunction with government and industry experts in the cost-
estimating community. By default, the guide also serves as a guiding 
principle for our auditors to evaluate the economy, efficiency, and 
effectiveness of government programs. 

[36] See appendix III for the list of 4 characteristics of high-
quality cost estimates mapped to the 12 steps of high-quality cost 
estimates. 

[37] GAO, GAO Schedule Assessment Guide: Best Practices for Project 
Schedules, [hyperlink, http://www.gao.gov/products/GAO-12-120G] 
(Washington, D.C.: May 2012). Developing the scheduling concepts 
introduced in the Cost Estimating and Assessment Guide, the GAO 
Schedule Assessment Guide presents them as ten leading practices 
associated with developing and maintaining a reliable, high-quality 
schedule. The leading practices were developed in conjunction with 
government and industry experts in the schedule estimating community. 
A companion to the Cost Guide, the GAO Schedule Assessment Guide 
serves also to present guiding principles for our auditors in 
evaluating the economy, efficiency, and effectiveness of government 
programs. 

[38] See appendix IV for a description of 10 leading practices for 
developing high-quality schedule estimates. 

[39] See for example GAO, Architect of the Capitol: Incorporating All 
Leading Practices Could Improve Accuracy and Credibility of Projects' 
Cost Estimates, [hyperlink, http://www.gao.gov/products/GAO-14-333] 
(Washington, D.C.: Mar. 25, 2014); VA Construction: VA Is Working to 
Improve Initial Project Cost Estimates, but Should Analyze Cost and 
Schedule Risks, [hyperlink, http://www.gao.gov/products/GAO-10-189] 
(Washington, D.C.: Dec. 14, 2009); and Modernizing the Nuclear 
Security Enterprise: New Plutonium Research Facility at Los Alamos May 
Not Meet All Mission Needs, [hyperlink, 
http://www.gao.gov/products/GAO-12-337] (Washington, D.C.: Mar. 26, 
2012). 

[40] See GSA Order 4210.1: CFO P Cost Estimation Policy Handbook, June 
27, 2007. The GSA Chief Financial Officer initiated this cost 
estimation policy in response to a GAO recommendation contained in 
GAO, Telecommunications: GSA Has Accumulated Adequate Funding for 
Transition to New Contracts, but Needs Cost Estimation Policy, 
[hyperlink, http://www.gao.gov/products/GAO-07-268] (Washington, D.C.: 
Feb. 23, 2007). Specifically, GSA concurred with a recommendation to 
establish a policy for cost estimation efforts that reflects leading 
practices by requiring that estimates be: comprehensive, well 
documented, accurate, and validated. 

[41] We established five descriptions for our assessments of leading 
practices and cost estimate characteristics: fully meets, 
substantially meets, partially meets, minimally meets, and does not 
meet. We consider a leading practice to be fully met when the 
associated tasks are completely satisfied, substantially met when a 
large portion of the associated tasks are satisfied, partially met 
when about half of the associated tasks are satisfied, minimally met 
when a small portion of the associated tasks are satisfied, and not 
met when none of the associated tasks are satisfied. Our assessment 
method weights each leading practice equally and bases the assessment 
of each characteristic on the average score of underlying leading 
practices. We assign each description a numerical value (5 for fully 
meets to 1 for does not meet) and round scores to the higher numerical 
value (i.e., a score of 4.5 would round up to 5). Assessments were 
conducted by an individual analyst, and then the results were 
independently traced and verified by a second analyst. 

[42] According to DHS and GSA officials, creating the cost and 
schedule estimates for the St. Elizabeths project was a joint 
undertaking. However, GSA and its contractors led the management of 
the cost and schedule estimates and therefore apply relevant GSA 
guidance. 

[43] See GSA, P-120: Project Estimating Requirements for the Public 
Buildings Service, January 2007, and GSA, P-100: Facilities Standards 
for the Public Buildings Service, November 2010. According to GSA, P-
120 is the cost-estimating and cost management criteria document that 
presents the technical and administrative requirements for routine 
cost-estimating and cost management tasks involved in a construction 
project's planning and execution stages, and defines cost-estimating 
practices and standards for professional services. P-100 establishes 
design standards and criteria for new buildings, repairs and 
alterations, and modernizations and also applies to lease construction 
with government option to purchase buildings. P-100 contains policy 
and technical criteria to be used in the programming, design, and 
documentation of GSA facilities. 

[44] GSA's Global Project Management (gPM) guidance, including the PBS 
Scheduling Fundamentals Guide, can be accessed by all GSA employees on 
their gPM intranet website. 

[45] The ash originated from the hospital's coal-fired power plant and 
was used as insulation. 

[46] See for example GAO, Architect of the Capitol: Incorporating All 
Leading Practices Could Improve Accuracy and Credibility of Projects' 
Cost Estimates, [hyperlink, http://www.gao.gov/products/GAO-14-333] 
(Washington, D.C.: Mar. 25, 2014); VA Construction: VA Is Working to 
Improve Initial Project Cost Estimates, but Should Analyze Cost and 
Schedule Risks, [hyperlink, http://www.gao.gov/products/GAO-10-189] 
(Washington, D.C.: Dec. 14, 2009); and Modernizing the Nuclear 
Security Enterprise: New Plutonium Research Facility at Los Alamos May 
Not Meet All Mission Needs, [hyperlink, 
http://www.gao.gov/products/GAO-12-337] (Washington, D.C.: Mar. 26, 
2012). 

[47] See GSA Order 4210.1: CFO P Cost Estimation Policy Handbook, June 
27, 2007. The GSA Chief Financial Officer initiated this cost 
estimation policy in response to a GAO recommendation contained in 
Telecommunications: GSA Has Accumulated Adequate Funding for 
Transition to New Contracts, but Needs Cost Estimation Policy, 
[hyperlink, http://www.gao.gov/products/GAO-07-268] (Washington, D.C.: 
Feb. 23, 2007). Specifically, GSA concurred with a recommendation to 
establish a policy for cost estimation efforts that reflects leading 
practices by requiring that estimates be: comprehensive, well 
documented, accurate, and validated. 

[48] See GAO, Executive Guide: Leading Practices in Capital Decision-
Making, [hyperlink, http://www.gao.gov/products/GAO/AIMD-99-32] 
(Washington, D.C.: Dec. 1, 1998). To produce this guide, we conducted 
extensive research to identify leading practices in capital decision-
making used by state and local governments and private sector 
organizations. Specifically, on the basis of interviews and 
documentation obtained from site visits to leading organizations, we 
identified innovative practices used by individual organizations as 
well as approaches and elements that were common across organizations. 
The leading organizations in our study reviewed a draft of this guide 
and verified that the case study examples are an accurate 
representation of their practices. These practices are, in part, 
intended to provide a disciplined approach or process to help federal 
agencies effectively plan and procure assets to achieve the maximum 
return on investments. In the overall capital decision-making 
framework, planning is the first phase--and arguably the most 
important--since it drives the remaining phases of budget, 
procurement, and management. 

[49] See GAO, Federal Capital: Three Entities' Implementation of 
Capital Planning Is Mixed, [hyperlink, 
http://www.gao.gov/products/GAO-07-274] (Washington, D.C.: Feb. 23, 
2007), and Budget Issues: Agency Implementation of Capital Planning 
Principles Is Mixed, [hyperlink, 
http://www.gao.gov/products/GAO-04-138] (Washington, D.C.: Jan. 16, 
2004). 

[50] GAO, GAO Cost Estimating and Assessment Guide: Best Practices for 
Developing and Managing Capital Program Costs, [hyperlink, 
http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.: Mar. 2, 
2009). The methodology outlined in this guide is a compilation of best 
practices that federal cost-estimating organizations and industry use 
to develop and maintain reliable cost estimates throughout the life of 
a government acquisition program. The leading practices were developed 
in conjunction with government and industry experts in the cost-
estimating community. By default, the guide also serves as a guiding 
principle for our auditors to evaluate the economy, efficiency, and 
effectiveness of government programs. 

[51] GAO, GAO Schedule Assessment Guide: Best Practices for Project 
Schedules, [hyperlink, http://www.gao.gov/products/GAO-12-120G] 
(Washington, D.C.: May 2012). Developing the scheduling concepts 
introduced in the Cost Estimating and Assessment Guide, the GAO 
Schedule Assessment Guide presents them as 10 leading practices 
associated with developing and maintaining a reliable, high-quality 
schedule. The leading practices were developed in conjunction with 
government and industry experts in the schedule-estimating community. 
A companion to the Cost Guide, the GAO Schedule Assessment Guide 
serves also to present guiding principles for our auditors in 
evaluating the economy, efficiency, and effectiveness of government 
programs. 

[52] We established five descriptions for our assessments of leading 
practices and cost estimate characteristics: fully meets, 
substantially meets, partially meets, minimally meets, and does not 
meet. We consider a leading practice to be fully met when the 
associated tasks are completely satisfied, substantially met when a 
large portion of the associated tasks are satisfied, partially met 
when about half of the associated tasks are satisfied, minimally met 
when a small portion of the associated tasks are satisfied, and not 
met when none of the associated tasks are satisfied. Our assessment 
method weights each leading practice equally and bases the assessment 
of each characteristic on the average score of underlying leading 
practices. We assign each description a numerical value (5 for fully 
meets to 1 for does not meet) and round scores to the higher numerical 
value (i.e., a score of 4.5 would round up to 5). Assessments were 
conducted by an individual analyst, and then the results were 
independently traced and verified by a second analyst. 

[53] GAO, Executive Guide: Leading Practices in Capital Decision-
Making, [hyperlink, http://www.gao.gov/products/GAO/AIMD-99-32] 
(Washington, D.C.: December 1998). 

[End of section] 

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