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Budget cuts stall dozens of building projects

Dec. 16, 2012 - 02:03PM   |  
By ANDY MEDICI   |   Comments

Plummeting budgets have left billions of dollars in construction and renovation projects only partially funded — and in some cases only partially finished.

The eight-phase, $750 million renovation of the 80-year-old Herbert Hoover Building in Washington, which is owned by the General Services Administration but serves as the Commerce Department headquarters, began in 2008 to shore up crumbling interior and exterior fixtures and modernize the information technology infrastructure.

Now, due to budget cuts, renovations slated to be finished in 2021 are indefinitely delayed until $454 million is found to cover remaining costs.

GSA is responsible for hundreds of millions in future construction, but the agency lacks the budget to finish them, GSA’s inspector general said in an October assessment of agency challenges.

“As a result, the completion of these projects will likely be postponed indefinitely,” the IG report said.

The IG said GSA must determine how to best use the completed sections of its partially renovated buildings and plan to pay more in the future to finish the projects.

“In the long run, project costs will rise due to inflation and the additional costs associated with remobilizing halted projects,” the IG said.

GSA spokesman Dan Cruz said the agency will continue to seek funding for future phases of projects and will work with agencies to update plans based on available funds.

GSA’s funding for construction projects plummeted from $894 million in 2010 to $82 million in 2011 and $50 million in 2012.

The renovation budget dropped from $414 million in 2010 to $280 million in 2011, holding steady at $280 million in 2012. GSA asked for $494 million for 2013, but it has only $280 million under the continuing resolution, which runs until at least March.

Other GSA projects facing indefinite delays include:

• Consolidating the Department of Homeland Security headquarters offices on the site of the former St. Elizabeths Hospital campus in southeast Washington. The initial plan called for the $3.45 billion project to be completed in 2016, but the cuts have driven up the cost of the project to $4.06 billion and pushed completion to 2022.

And that estimate is optimistic because it assumes that GSA and DHS will receive about $2.5 billion more in funding — the agencies have already put $1.5 billion toward the project.

While the Coast Guard will be able to move into its completed headquarters on the St. Elizabeths site as scheduled this spring, dozens of other planned DHS buildings will remain unfinished. That means DHS must renew short-term leases throughout the area until employees can move to the headquarters campus.

• Modernizing the Prince Jonah Kuhio Kalanianaole Federal Building and Courthouse in Honolulu. GSA received $117 million for the first phase of the renovation. But it failed to get from Congress the $199 million it asked for in fiscal 2012 for the second phase.

GSA has been working to break the logjam caused by funding cuts. Its strategies include offering exchanges of old properties for renovations or new construction.

Under one such proposal, GSA is trying to kick-start the indefinitely delayed second phase of its own headquarters renovation in northwest Washington by including it as part of a plan to renovate or build several new federal buildings in southwest Washington in cooperation with private companies.

GSA has estimated the total headquarters renovation project to cost between $200 million and $250 million. It received $162 million for the first phase and renovated most of the 700,000-square-foot building. Phase two will add more than 105,000 square feet of space.

Also, in a Dec. 3 request for information, GSA is asking companies to come forward with ideas on how to exchange the 2.4 million-square-foot J. Edgar Hoover FBI Building in downtown Washington for a new headquarters nearby.

“What we’ve said to the marketplace is here are the needs of the FBI. How much of them can be met in exchange for the [J. Edgar] Hoover Building? Give us your great ideas,” acting GSA Administrator Dan Tangherlini said.

The Veterans Affairs Department is also facing a $5.2 billion-plus price tag for 21 unfinished construction projects. All have advanced to the design stage or beyond.

In March, House Veterans Affairs Committee Chairman Rep. Jeff Miller, R-Fla., raised concerns about VA construction projects that have taken far longer to build than estimated and have caused the cost of the projects to rise.

The House Appropriations Committee recommended in its fiscal 2013 appropriations bill that future VA construction funds be given a five-year time limit as incentive for VA to better plan and design projects before it requests funding.

Robert Neary, acting executive director for VA’s Office of Construction and Facilities Management, said it will likely take several years before all the projects are fully funded.

Beginning with the fiscal 2013 request, VA did not ask for funding for new projects so it could focus funding on existing projects, he said.

Neary also said VA changed its policies so that it will not seek construction funding for a new project until at least 35 percent of the design is finished, so that it can begin projects the same year it receives funding and cut down on delays.

The partially funded VA projects include:

• A new medical facility in Louisville, Ky., which has received $75 million in funding but still needs $825 million more. VA requested no additional funds for the project in 2013.

• 600,000 square feet of replacement facilities for more than 10 buildings with seismic issues at the VA medical center in Palo Alto, Calif. VA has received $270 million of the $716 million it needs to complete the project. It requested $177 million for the project in 2013.

• A $222 million project to renovate older facilities and build a new facility specializing in mental health services at the Seattle medical center to deal with the growing number of patients. VA received $17 million for the project in 2009 and requested $55 million in 2013.

Jimmy Christianson, director of government affairs at the Associated General Contractors of America, said delays between phases of construction projects cause overall costs to rise.

The time to fund construction projects is now, he said, when there is intense competition for contracts and the cost of materials is low.

“Time is money and the federal government seems to be doing a good job of wasting it on projects,” Christianson said.

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