Construction Costs Incurred by the Department of the Navy

This decision concerns construction costs incurred by the Department of the Navy under a contract with Entrecanales Y Tavora, S.A., to build the United States pavilion for the Seville Expo. The Navy procured and administered the contract for the United States Information Agency pursuant to an interagency agreement. During discussions with our evaluators, House Committee on Foreign Affairs staff members asked us to determine (1) who was responsible for approximately $2 million in construction costs that exceeded the amount USIA had budgeted and authorized the Navy to spend under the agreement, and (2) whether the Navy or USIA should pay for those excess construction costs. USIA has suggested that the Navy improperly allowed the contractor to spend more money than USIA had authorized, and that the Navy therefore should pay that excess. Both agencies, in attempting to insure timely completion of the Pavilion under difficult circumstances, contributed to the additional costs. GAO determined the contract costs should be paid out of USIA funds, subject to review by the Defense Contract Audit Agency.