Navy Office Space:

Cost Estimate for Consolidating the Naval Systems Commands May Be High

GGD-91-61: Published: Mar 8, 1991. Publicly Released: Mar 8, 1991.

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Pursuant to a congressional request, GAO reviewed the General Services Administration's (GSA) cost estimates for consolidating Naval Systems Commands offices in a single facility in northern Virginia.

GAO found that: (1) GSA estimated that it would cost $273.8 million to construct 1 million square feet of occupiable space; (2) the GAO construction cost estimate was $34.8 million lower than the GSA estimate, but the GAO land cost estimate was $19.3 million higher; (3) the reasons for differences between GAO and GSA estimates included different definitions of occupiable space, inflation, and different unit costs; (4) GSA cost estimates for 10 recent construction projects following a similar estimating process as the Navy project were 9 percent higher overall than the eventual contract awards; (5) the GSA estimated cost per square foot exceeded its general cost guidelines; (6) real estate development market conditions could result in offerors accepting lower than normal overhead costs and profits; and (7) project costs could be reduced if GSA used value engineering.